NVIDIA’s DCF Intrinsic Value Assessed at $162.76 with 8.87% Safety Margin
NVIDIA’s earnings-based DCF intrinsic value is $162.76, using a 10% discount rate, 54.2% EPS growth for 10 years and 4% terminal growth, implying an 8.87% margin of safety. The free cash flow–based DCF yields $135.75, indicating a 30.53% safety shortfall that suggests modest overvaluation under cash flow assumptions.
1. Earnings-Based DCF Intrinsic Value
The model estimates intrinsic value at $162.76 per share by discounting projected EPS without non-recurring items using a 10% rate across two stages.
2. Growth Stage Assumptions
The growth stage assumes 54.2% EPS growth annually over 10 years, reflecting historical performance and capped to balance optimism. These projections drive the higher initial valuation component.
3. Terminal Stage and Combined Valuation
In the terminal stage, a 4% annual growth rate is applied for another 10 years, ensuring convergence below the discount rate. Combining both stages yields the total discounted earnings value.
4. Free Cash Flow DCF Comparison
A separate DCF using trailing twelve-month free cash flow per share assesses intrinsic value at $135.75, resulting in a -30.53% margin of safety and highlighting modest overvaluation under cash flow metrics.