Moody's raises rating one notch to A3 from Baa1; outlook postiive
- Nvidia's A3 senior unsecured rating reflects the company's strong position in growing markets of visual computing, led by the gaming sector, along with the high performance data center, automotive and enterprise graphics end markets. Based on the acceleration of data-intensive computing coupled with Nvidia's broadening range of accelerated computing offerings, Moody's expects Nvidia's strong financial performance will continue over the intermediate term. The company's growing profitability, strong cash flow, robust liquidity, modest leverage, and a balanced capital allocation philosophy also support the rating. Strong revenue growth with modestly expanding gross margins, and importantly, Nvidia's use of one architecture across its product lines that leverages a common investment in R&D, contribute to our expectations of low-to-mid 30% EBITDA margins and free cash flow in excess of $2 billion over the next year.
- The positive outlook reflects Moody's expectations that Nvidia will continue to maintain its strong market position as customers across a range of industries increasingly adopt accelerated computing and artificial intelligence that use Nvidia's graphic processing units and related software. The outlook also incorporates expectations that management will not deviate from its practice of maintaining a very liquid and modestly leveraged capital structure.