NVIDIA DCF Analysis Values Stock at $147.81, Trading 13% Above Fair Value
NVIDIA’s earnings-based DCF model estimates intrinsic value at $147.81, with a margin of safety of -13.33% against its $167.52 trading price. A free cash flow DCF yields a $123.28 valuation, implying a -35.89% safety margin.
1. Earnings-Based DCF Valuation
NVIDIA’s Discounted Earnings model uses an EPS without NRI of $4.73, a discount rate of 11% and a 54.20% growth rate over 10 years to calculate an intrinsic value of $147.81. At the current trading level of $167.52, this implies a negative margin of safety of -13.33%.
2. Free Cash Flow DCF Valuation
Using trailing twelve-month free cash flow per share, the traditional DCF model produces an intrinsic value of $123.28. This translates to a wider negative safety margin of -35.89% relative to the prevailing share price.
3. Key Assumptions and Methodology
The models apply a two-stage approach: an initial 10-year growth phase followed by a 10-year terminal phase. Key inputs include a discount rate derived from a 5% Treasury yield plus a 6% risk premium, a 54.20% first-stage growth rate capped by methodology, and a 4% terminal growth rate to ensure convergence.