It Is What Is, Underweight Nvidia, Do Not Buy


  • I previously published 23 buy ratings for Nvidia here. This no. 24 thesis will explain why Nvidia is now a sell.
  • The -49.52% YTD price performance of NVDA has not eliminated its gross overvaluation. NVDA isn’t a Buy due to its 91.88x forward P/E metric.
  • My rule is that growth stock should only get 22x forward P/E. A growth stock should deliver 20% revenue CAGR.
  • Nvidia’s TTM revenue CAGR is now only 17.68%. This is significantly lower than its past 3-year average of 41.80%.
  • Bearish technical indicators are saying the general market emotion will help push down NVDA’s price.
Graphics Chip Maker Nvidia Reports Quarterly Earnings

Justin Sullivan

Investment Thesis

Nvidia’s YTD performance is -49.52%. This big dip has not eradicated the relative overvaluation of NVDA. I endorsed Nvidia before as a buy 23x here at Seeking Alpha up to 2018. My older self now rates

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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