Nvidia (NVDA): Reassessing Valuation After a Fresh 10% Weekly Share Price Jump

Why NVIDIA Stock Is Back in Focus

Nvidia (NVDA) shares have quietly climbed about 10% over the past week, outpacing the broader market and putting the spotlight back on what investors are actually paying for its rapid AI led growth.

See our latest analysis for NVIDIA.

That 10.3% 7 day share price return comes on top of a strong year to date move, with NVIDIA still riding a powerful AI infrastructure cycle even after a multi year total shareholder return in the four digit range. This suggests momentum is far from exhausted.

If NVIDIA’s run has you rethinking your tech exposure, this is a good moment to scout other potential winners through high growth tech and AI stocks and see what else is building real momentum.

With shares already up sharply this year and trading at a premium to many peers, the key question now is simple: Is NVIDIA still undervalued given its AI trajectory, or has the market already priced in its future growth?

Most Popular Narrative: 19.7% Undervalued

According to restinglion, the narrative fair value of $235 for NVIDIA sits well above the last close at $188.61, pointing to meaningful upside if those assumptions play out.

While its monumental past illustrates a historic run that may never be recreated, the company stands in a position to continue historic growth; although this growth may not meet standards set in the past 5 years, the company will still maintain a chokehold on the high tech ai market for these 3 reasons:

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

Read the complete narrative.

Curious how this narrative still lands on a premium fair value, even after trimming growth assumptions and baking in rich margins and future earnings multiples? Dig into the full breakdown driving that target.

Result: Fair Value of $235 (UNDERVALUED)

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

However, several risks remain, including intensifying AI chip competition and potential slowdowns in data center spending that could challenge NVIDIA’s premium valuation.

Find out about the key risks to this NVIDIA narrative.

Another View: SWS DCF Flags Overvaluation

While the user narrative sees fair value at $235, our DCF model points the other way, with an estimated fair value of $162.35, implying NVIDIA looks overvalued at $188.61. Which story better matches your conviction about how durable this AI cycle really is?

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 903 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 this perspective does not quite fit your view, or you would rather dig into the numbers yourself, you can craft a custom narrative in just a few 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.

Looking for more investment ideas?

Do not stop with just one stock; use Simply Wall Street’s powerful Screener to uncover fresh opportunities that match your strategy before the market fully recognizes them.

• Explore potential mispricings by targeting companies trading below their estimated worth through these 903 undervalued stocks based on cash flows, where strong cash flows meet attractive entry prices.
• Focus on the evolving automation theme by looking at AI innovators with these 24 AI penny stocks that may reshape entire industries.
• Support your income strategy by identifying dependable payers using these 10 dividend stocks with yields > 3%, which is designed to highlight yields that stand out without overlooking fundamentals.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com