NVIDIA valuation

Using the Discounted Asset Model, determine the current intrinsic value of Nvidia shares. To calculate the company's intrinsic value, we utilise a valuation technique known as the "Discounted Cash Flow $($DCF$)"$ method. The DCF approach evaluates a company's 'perceived stock price' while taking into account all future cash flows.

Intrinsic value of stocks are:$-$

$1).$ Estimate all of a company's future cash flows.

$2).$Calculate the present value of each of these future cash flows.

$3).$Sum up the present values to obtain the intrinsic value of the stock.

Nvidia $($NVDA$)$ is on the list of such stocks currently recommended by our proprietary system. In addition to a favorable Growth Score, it carries a top Zacks Rank. $...$ And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank. Based on these figures and assuming a discount rate of $9\%,$ we see that Nvidia is overvalued by $50$ percent, which is essentially in line with the fundamental valuation. Investors should not forget that we could also see a change in interest rates next year. A discount rate of $9$ percent could therefore be far too low.