Nvidia Corporation Stock Fair Value Calculation – NVIDIA’s AI Boom Echoes Cisco’s Internet Bust
December 19, 2023
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Nvidia ($NASDAQ:NVDA) is an American multinational computer technology corporation that specializes in the development of graphics processors for gaming, AI, and professional visualization markets. Cisco is an American multinational technology conglomerate that designs, manufactures, and sells networking hardware, software, telecommunications equipment, and other high-tech services and products. The company had become overvalued due to the speculation of the internet and the overestimation of investor demand. This collapse serves as a powerful reminder of the rapidly changing nature of the tech industry and how quickly fortunes can turn.
The surge of AI technology from Nvidia and the legacy of Cisco’s Internet collapse are both remarkable examples of how quickly the tech industry can change. Both companies serve as a reminder to investors that profits can come quickly in the tech industry, but can just as easily evaporate if they do not stay ahead of the curve.
Market Price
On Monday, NVIDIA CORPORATION stock opened at $494.0 and closed at $500.8, up by 2.4% from prior closing price of 488.9, indicating that the company’s artificial intelligence (AI) business is booming. This echoes the success that Cisco Systems enjoyed two decades ago during the dot-com boom, when its stock price nearly quadrupled in a single year. The success of NVIDIA’s AI business can be attributed to the company’s focus on areas such as data centers, cloud computing, and graphics processing units (GPUs). In particular, its powerful GPUs have allowed it to strengthen its foothold in the AI market and are now being used in everything from autonomous vehicles to robots and medical imaging.
This, in turn, has enabled the company to grow its revenues by leaps and bounds and achieve profitability. As the AI industry continues to evolve, NVIDIA appears poised to benefit from the growth of the sector which could, in turn, further boost its stock price. With its strong financials and robust product portfolio, there is no doubt that NVIDIA is well positioned to capitalize on the AI boom. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Nvidia Corporation. More…
| Total Revenues | Net Income | Net Margin |
| 44.87k | 18.89k | 42.1% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Nvidia Corporation. More…
| Operations | Investing | Financing |
| 18.84k | -4.46k | -11.66k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Nvidia Corporation. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 54.15k | 20.88k | 13.49 |
Key Ratios Snapshot
Some of the financial key ratios for Nvidia Corporation are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 44.8% | 72.5% | 47.4% |
| FCF Margin | ROE | ROA |
| 39.0% | 43.7% | 24.5% |
Analysis – Nvidia Corporation Stock Fair Value Calculation
At GoodWhale, we have conducted an analysis of the financials of NVIDIA CORPORATION. Our proprietary Valuation Line tool has determined that the intrinsic value of the share of NVIDIA CORPORATION is around $378.0. However, the current trading price of NVIDIA CORPORATION stands at $500.8, which is overvalued by 32.5%. This suggests that investors may not be properly valuing the stock at this time. More…
Peers
Nvidia Corporation is an American technology company headquartered in Santa Clara, California. It designs graphics processing units (GPUs) for the gaming and professional markets, as well as system on a chip units (SOCs) for the mobile computing and automotive market. Nvidia’s primary GPU product line, labeled “GeForce”, is in direct competition with Advanced Micro Devices’ (AMD) “Radeon” products.
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VeriSilicon Microelectronics Shanghai Co Ltd is a fabless semiconductor company that designs, develops, and markets integrated circuits (ICs) and other semiconductor products. The company’s product portfolio includes power management ICs, digital signal processors, and other mixed-signal ICs for a range of end markets, including automotive, consumer, industrial, and communications. VeriSilicon Microelectronics Shanghai Co Ltd was founded in 2001 and is headquartered in Shanghai, China.
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JMicron Technology Corp is a leading provider of innovative semiconductor solutions. The company’s products include high-speed data converters, storage controllers, and Ethernet controllers. JMicron’s products are used in a variety of applications including consumer electronics, computing, and storage. The company has a market cap of 4.02B and a return on equity of 10.28%. JMicron is a publicly traded company on the Taiwan Stock Exchange.
Summary
NVIDIA has seen tremendous growth in the past decade, driven primarily by their success in the AI and gaming industries. Their stock price has risen significantly over the past year, due to strong demand in both these markets, as well as the introduction of new products such as their RTX GPUs. Investment analysts are optimistic about the future of NVIDIA, citing their strong competitive advantages, such as their R&D capabilities, ability to adapt quickly to changing trends, and extensive partnerships with tech giants such as Microsoft and IBM.
They also have a strong balance sheet, with a high return on equity and low debt levels. As a result, many analysts believe NVIDIA is well-positioned to continue its growth trajectory in the coming years.
