Nvidia (NVDA): Exploring Valuation After the Recent Share Price Cooldown

Nvidia (NVDA) has cooled off recently, slipping about 8% over the past month and 3% in the past 3 months, even as its long term returns remain exceptional.

See our latest analysis for NVIDIA.

At around $170.94 per share, Nvidia’s recent pullback and negative 1 month share price return look more like a breather than a breakdown, especially given its strong year to date share price gain and massive multi year total shareholder returns.

If Nvidia’s run has you rethinking where the next leaders might emerge, it is a good moment to explore high growth tech and AI stocks as potential additions to your watchlist.

With Nvidia still growing revenue and profits at roughly 25% annually and trading nearly 47% below consensus targets but at a rich intrinsic valuation, are investors seeing a rare mispricing, or has the market already captured tomorrow’s AI gains?

Most Popular Narrative Narrative: 27.3% Undervalued

With the narrative fair value set materially above Nvidia's last close, the story leans toward sizable upside if its growth engine keeps compounding.

High switching costs: companies like google, apple, microsoft, meta can't afford to compete with lower tech chips and software. NVIDIA sizably leads the market.

High revenue and gross margins (insane profits): NVIDIA has profited 72 billion, some publicly traded companies will never reach 72 billion in revenue. And this number is only expected to grow as AI will continue to grow, innovating under the fingertips of NVIDIA.

Read the complete narrative.

Curious how this narrative turns dominance, premium software, and fat margins into a higher fair value than today’s price? The growth assumptions might surprise you.

Result: Fair Value of $235 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, several risks could challenge this bullish view, including intensifying AI chip competition and potential margin pressure if hyperscalers curb spending or pursue in house solutions.

Find out about the key risks to this NVIDIA narrative.

Another View on Value

While the user narrative sees NVIDIA about 27% undervalued at $235 per share, our DCF model is more cautious and puts fair value closer to $163, slightly below today’s price. Is the crowd overestimating AI’s durability, or is the model underpricing a structural shift?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out NVIDIA for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 908 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own NVIDIA Narrative

If you are not convinced by this view or would rather examine the numbers yourself, you can build a tailored narrative in minutes: Do it your way.

A great starting point for your NVIDIA research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

Ready for your next investing move?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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