Quick analysis of Nvidia stock. For more detailed ideas visit our substack https://www.overlookedalpha.com
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00:00 Should you buy Nvidia stock?
00:02 Nvidia is a leader in microchips, graphical processing units and software. With $13.1
00:08 billion of cash on the balance sheet including marketable securities, the enterprise value
00:12 is roughly $388 billion. This gives Nvidia a valuation around 13.6 times revenue or 65
00:19 times earnings.
00:20 Let's assume a basic scenario where Nvidia grows revenue 15% per year for the next 10
00:25 years, then trades at a 25 times multiple to earnings with a 35% net income margin,
00:31 earnings would be roughly $40 billion and the company would be worth around $1 trillion
00:35 in 10 years time, which works out to an investment return of 10% per annum.
00:40 But that's not a great return for such an optimistic scenario. The problem is that Nvidia
00:44 stock has rebounded 46% over the past few weeks taking the P/E multiple back past 60
00:51 and that's simply too expensive right now at this point in the cycle. For more detailed
00:55 analysis visit our website overlookedalpha.com