Nvidia Stock: Dreadful Earnings, AI Hopium, Bubbly Valuations, And More


  • After a stunning rally in recent months, Nvidia is once again the most valuable semiconductor company on the face of the earth, with a market capitalization of ~$560B.
  • While AI is all set to reinvigorate growth and profits at Nvidia, the stock is baking in unrealistic assumptions for revenue growth. I love the company, not the stock.
  • In this note, we’ll perform a reverse DCF analysis to determine an implied revenue growth rate for Nvidia and check its feasibility in relation to its business.
  • Furthermore, we’ll determine Nvidia’s fair value estimate and projected five-year CAGR returns using TQI’s valuation model.
  • At ~21x P/S, Nvidia stock is ridiculously expensive, and I wouldn’t touch with a 10-foot pole at current levels. I rate Nvidia neutral or avoid at $225 per share.
Markets Open In New York After A Volatile Week

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After doubling off of its October lows in a matter of weeks, Nvidia (NASDAQ:NVDA) has regained its title as the “world’s most valuable semiconductor company” (as measured by market capitalization at 8:00 PM EST on 02/22/2023 – Nvidia: $555B, data from Google Finance). While the


Nvidia’s LTM Revenue (in $ B)


Optimized Free Cash Flow Margin (%)


Share Count (in B)


Modeling Time Period (in years)


CAGR Revenue Growth In Modeling Period (%)


Terminal growth rate (%)


Required IRR (%)


Terminal Discount Rate (%)


Final Result:

Implied 5-yr revenue CAGR for Nvidia


Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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