Nvidia’s Mushrooming Cash Pile Spotlights Spending Choices

All of the big tech companies have long been cash geysers. But the rate at which Nvidia’s cash production has exploded in the past couple of years is on a whole different level than other companies have experienced. And that’s raising questions about how Nvidia will spend its fast-expanding cash pile.

Nvidia’s free cash flow has mushroomed from $3.8 billion in the year to January 2023 to an estimated $96.5 billion in the year ending this coming January, a period when its sale of specialized chips for AI took off. That revenue growth represents a compound annual growth rate of 194%. A scan of the biggest tech firms’ financial history going back to 1990 suggests that’s a faster rate of growth than any experienced during any three-year period in that time. The only period that comes close is Apple’s takeoff in the years immediately after it introduced the iPod in 2001. (See chart above).