Part 2: Revenue, Profit & Earnings Per Share (EPS)
In Part 1, we learned what NVIDIA does and why its technology is important in the AI revolution.
Today, let's understand three important financial terms that every beginner should know before studying a company's earnings.
1. What is Revenue?
Revenue is the total money a company earns by selling its products or services before deducting expenses.
For example:
If NVIDIA sells AI chips and computing systems worth $100 billion, its revenue is $100 billion.
Remember: Revenue is not the same as profit!
2. What is Profit?
Profit is the money left after deducting business expenses from revenue.
Example:
- Total Revenue: $100 billion
- Business Expenses: $60 billion
- Remaining Profit: $40 billion
This means the company generated $40 billion in profit in this simplified example.
3. What is EPS (Earnings Per Share)?
EPS tells investors how much profit is attributable to each ordinary share of a company.
Example:
If a company earns $10 billion in net profit and has 5 billion shares:
EPS = $2 per share.
A higher EPS can indicate stronger profitability, but investors should also examine how it changes over time.
4. Applying These Concepts to NVIDIA
According to the estimates in our November 2026 earnings preview:
- Expected Revenue: Approximately $109.2 billion.
- Expected Adjusted EPS: Approximately $2.48.
- Previous Year's Revenue: $57.01 billion.
- Previous Year's Adjusted EPS: $1.30.
These are analyst expectations, not confirmed results.
5. Why Should Investors Understand These Numbers?
Imagine two companies:
Company A has high revenue but very high expenses.
Company B has lower revenue but better cost control and stronger profit margins.
Which company is financially stronger?
You cannot decide by looking at revenue alone. You need to examine profit, EPS, margins, debt and future growth as well.
Today's Key Learning Points
📌 Revenue = Total sales income.
📌 Profit = Money remaining after expenses.
📌 EPS = Earnings attributable to each share.
📌 Analyst Estimates = Predictions, not guaranteed results.
Remember: A successful investor does not just look at how much a company sells. They study how much it earns and how efficiently it operates.
Knowledge Comes Before Investment!
Next Lesson – Part 3: Understanding AI Data Centers, NVIDIA Blackwell and Vera Rubin technology.
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