The calculations below outline how an intrinsic value for NVIDIA is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.
See our documentation to learn about this calculation.
|Levered FCF (USD, Millions)||$1,338.76||$2,195.58||$2,668.99||$3,174.67||$3,682.61|
|Source||Analyst x10||Analyst x11||Analyst x11||Analyst x3||Extrapolated @ (16%, capped from 17.44%)|
Discounted (@ 8.5%)
Present value of next 5 years cash flows:
Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = $3,683 × (1 + 2.3%) ÷ (8.47% – 2.3%)
Terminal value based on the Perpetuity Method where growth (g) = 2.3%:
Present value of terminal value:
Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
Value = Total value / Shares Outstanding ($50,784 / 600)
Value per share:
Current discount (share price of $185.84): -120%
The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.
Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
Discount rate = 8.47% = 2.33% + (0.801 * 7.67%)
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
0.801 = 0.791 (1 + (1- 30%) (1.86%))
Levered Beta used in calculation = 0.801
Are NVIDIA's annual earnings growth expected to exceed 3.4% over the next 3 years?
Mr. Jensen Hsun Huang founded NVIDIA Ltd. in 1993 and has been its Chief Executive Officer and President since 1993. Mr. Huang co-founded NVIDIA Corporation in April 1993 and has been its Chief Executive Officer and President since April 1993. Mr. Huang served as an Advisor at IT-Farm Corporation. Under his leadership, NVIDIA has become the world leader in programmable graphics processing technologies and one of the semiconductor industry's largest fabless companies. Mr. Huang served as a Trustee of The RAND Corporation since 1999. From 1985 to 1993, he was employed at LSI Logic Corporation where he held a variety of positions. From 1984 to 1985, Mr. Huang served as a Microprocessor Designer for Advanced Micro Devices, Inc. He has been a Director of NVIDIA Corporation and NVIDIA Ltd. since April 1993. He served as Director of The RAND Corporation and Coreware. He serves as a Director of Semiconductor Industry Association. He is also a Member of the Committee of 100. In 2004, the Fabless Semiconductor Association honored him with the prestigious Mr. Morris Chang Exemplary Leadership Award. Mr. Huang is often invited to speak on technology and business trends at industry events. He holds an M.S. in Electrical Engineering degree from Stanford University and a B.S. in Electrical Engineering degree from Oregon State University.
Average tenure of the NVIDIA management team:
Average tenure of the NVIDIA board of directors:
NVIDIA Corporation operates as a visual computing company worldwide. It operates in two segments, GPU and Tegra Processor. The GPU segment offers processors, which include GeForce for PC gaming; GeForce NOW for cloud-based game-streaming service; Quadro for design professionals working in computer-aided design, video editing, special effects, and other creative applications; Tesla for deep learning, accelerated computing, and general purpose computing; and GRID for cloud-based visual computing users. The Tegra Processor segment provides processors that integrate a computer onto a single chip under the Tegra brand name; DRIVE automotive computers, which offer self-driving capabilities; and tablet and portable devices for mobile gaming and TV streaming under the SHIELD name. The company’s products are used in gaming, professional visualization, datacenter, and automotive markets. It sells its products primarily to original equipment manufacturers, original device manufacturers, system builders, motherboard manufacturers, add-in board manufacturers, and retailers/distributors. NVIDIA Corporation was founded in 1993 and is headquartered in Santa Clara, California.
|Market Cap:||$111,504 million|
2701 San Tomas Expressway, Santa Clara, 95050, United States
|Sector:||Semiconductors and Semiconductor Equipment|