On Thursday, corporate bond research firm Gimme Credit began coverage of NVIDIA’s (NVDA) 2030 corporate bond offering with a buy rating, highlighting the company’s strong performance driven by its significant role in the artificial intelligence (AI) market.
The firm noted that Nvidia (NASDAQ:), known for its dominance in the GPU market, boasts a market share exceeding 85% and its revenue more than tripled in the fiscal first quarter ended April 28, thanks in large part to demand for its products. Hopper GPU computing platform.
Analysts believe the company’s success shows no signs of slowing, with revenue expected to more than double in the second quarter and for the full fiscal year.
The firm explains that Nvidia’s data center market, serving hyperscale cloud computing providers, is a major source of revenue, accounting for more than 85% of the total. Other major buyers include corporate, consumer internet companies and government entities. Automotive is expected to become the largest vertical in the data center sector this year.
Additionally, Gimme Credit reports that Nvidia’s financial health appears strong, with free cash flow of nearly $27 billion in fiscal 2024. Expected revenue growth and improved profitability could cause that figure to soar to around $58 billion this year. Analysts say the company’s leverage is extremely low, with $10 billion in debt and more than $34 billion in fiscal 2024 EBITDA, resulting in a leverage ratio of 0.3x at the start of the year, which is forecast to fall to 0.1x.
While Nvidia faces competition from the likes of Advanced Micro Devices and Intel, as well as potential challenges such as China’s export control restrictions and global tariff wars, these factors are not currently seen as a major threat to its continued revenue growth and increasing operating profit.
Gimme Credit’s Buy rating is tied to the 2030 bond issue, which is trading at a +36 spread, reflecting confidence in Nvidia’s financial strength and market position.