NVDA - FCF is ultimatly KING!
I've seen a lot of chatter about $NVIDIA(NVDA)$ 's free cash flow falling while net income continues to rise.
Companies CAN game accounting rules, and this is often a 🚩, BUT we should know what's going on.
There was a $5.7 billion jump in receivables, or orders shipped but not yet paid for. Probably nothing, but worth watching.
There was a $3.6 billion increase in inventory. This is concerning since "demand outstrips supply" but it could also be work in progress inventory given NVIDIA building more systems. TBD what's going on, but this was an outlier, so worth watching.
Change in accrued liabilities - this is a BIG catch-all with things like deferred revenue and customer accruals. Probably not great its declining, but this has been VERY volatile.
Payments related to employee stock plan taxes. This is a big catch-all, but I believe it's related to the fact that stock has been given as comp and the rising stock price results in tax payments for payroll, etc.
In other words, there isn't a reason to sell...yet. But there are some things to watch. FCF is ultimatly KING!
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