As a leader in AI and graphics processing units (GPUs), NVIDIA Corporation (NVDA) has always been the focus of investors' attention for its stock valuation. Based on data as of March 13, 2025, this report combines public research reports and statistical analysis to explore whether its stock is overvalued and provides detailed analysis process and reasons.
Data collection and valuation indicator calculation
First, we gathered Nvidia's current stock price and key financial metrics.
- As of March 13, 2025, Nvidia's stock price is $116.20, according to Investing.com .
- Price-to-Earnings (P/E) Ratio: According to MacroTrends and other sources, the current P/E is around 38-40, depending on the earnings per share (EPS) figure used. For example, Nasdaq shows a TTM EPS of 2.94 and a P/E of around 37.00.
- Price-to-Sales Ratio (P/S): With revenue of $147.5 billion in fiscal year 2025, market capitalization is approximately $2.84 trillion ($116.20 × 24.4 billion shares), and a P/S of approximately 19.25.
- Price to Book Ratio (P/B): According to Finance Yahoo , the current P/B is 35.55.
Industry and Historical Comparison
To assess whether it is overvalued, we compared Nvidia's valuation to the industry average and historical data:
- Industry Average P/E : According to Simply Wall St , the current P/E of the US semiconductor industry is about 47.1, and the 3-year average is 42.2. Nvidia's P/E (38-40) is slightly lower than the industry average, indicating that it is relatively reasonable.
- Industry Average P/S : The industry P/S is around 8-10 (according to Simply Wall St ), Nvidia's 19.25 is much higher than this, suggesting that it may be overvalued.
- Industry Average P/B : Specific data is limited, but based on ON Semiconductor 's P/B of 3.92, Nvidia's 35.55 is significantly higher than the industry, showing the market's premium for its intangible assets.
- Historical P/E : Assuming the average P/E over the past 5 years was 35 (based on hypothetical data), the current P/E is slightly higher, but this may be reasonable considering the AI boom.
Analyst consensus and price targets
Analysts are generally optimistic about Nvidia:
- According to Zacks , the average target price of 42 analysts is $177.43, suggesting an upside potential of 63.30%.
- MarketBeat shows the average target price is $171.69.
- In terms of ratings, 39 institutions gave a "strong buy", 2 gave a "buy", there was no sell rating, and the average rating was 1.22 (1-5, 1 being a strong buy), showing market confidence.
Statistical analysis
To further analyze this, we can calculate the Z-score of Nvidia’s valuation metrics and compare its deviation from the industry average:
- P/EZ score: (40 - 42.2) / standard deviation (assuming standard deviation is 10) ≈ -0.22, which is slightly below average.
- P/SZ score: (19.25 - 9.5)/standard deviation (assumed to be 5) ≈ 1.95, which is significantly higher than the average.
- P/BZ score: (35.55 - 4) / standard deviation (assuming 5) ≈ 6.31, which is much higher than the average.
This suggests that Nvidia may be overvalued based on P/S and P/B, but the P/E shows relative rationality.
| index | NVIDIA Value | Industry average | Remark |
|---|---|---|---|
| Price-to-Earnings Ratio (P/E) | 38-40 | 42.2 | Slightly lower than the industry average, relatively reasonable |
| Price to Sales Ratio (P/S) | 19.25 | 8-10 | Much higher than the industry, possibly overvalued |
| Price to Book Ratio (P/B) | 35.55 | ~4 | Significantly higher than the industry, showing a premium |
Growth and risk analysis
Nvidia's growth prospects support its high valuation:
- Revenue for fiscal year 2025 is $147.5 billion, up 101% year-over-year, with data center revenue up 93%, indicating strong demand ( NVIDIA Newsroom ).
- Strong sales of Blackwell chips further boosted growth ( TheStreet ).
However, risks include slowing AI demand, increased competition (e.g. AMD, Intel), and supply chain issues ( Alpha Spread ).
Research Report Overview
Public research reports show disagreement:
- Morningstar believes that the current share price is above its fair value of $105, indicating overvaluation.
- Ziggma points out that the P/S is as high as 30x, suggesting overvaluation, but also acknowledges the growth potential of AI.
- Simply Wall St believes that the current price of $112.69 is below the fair value of $127.59, indicating undervaluation.
- Alpha Spread also believes that the current price of $108.76 is lower than the fair value of $113.76, indicating a 4% undervaluation.
in conclusion
Overall, Nvidia's stock does not seem to be overvalued based on P/E and analyst consensus , and its growth prospects and market confidence support the current valuation. Although P/S and P/B show possible overvaluation, this may be reasonable considering its leadership in the AI field. Ultimately, investors should weigh growth potential against risks and make decisions based on their personal risk preferences.
Key Quotes
- NVIDIA Corporation (NVDA) Valuation Measures & Financial Statistics
- NVIDIA PE Ratio 2010-2025 | NVDA | MacroTrends
- U.S. Semiconductors Industry Analysis
- NVIDIA Announces Financial Results for Fourth Quarter and Fiscal 2025 | NVIDIA Newsroom
- What is the current Price Target and Forecast for NVIDIA (NVDA)
- NVDA Intrinsic Valuation and Fundamental Analysis - NVIDIA Corp - Alpha Spread
- Is Nvidia Overvalued? A Fundamental Analysis - Ziggma
- Going Into Earnings, Is Nvidia Stock a Buy, a Sell, or Fairly Valued? | Morningstar
- NVIDIA (NasdaqGS:NVDA) Stock Valuation, Peer Comparison & Price Targets - Simply Wall St
| (USD) | Jan 2025 | Y/Y change |
|---|---|---|
Revenue | 39.33B | 77.94% |
Operating expense | 4.69B | 47.59% |
Net income | 22.09B | 79.82% |
Net profit margin | 56.17 | 1.06% |
Earnings per share | 0.89 | 72.48% |
EBITDA | 24.58B | 75.54% |
Effective tax rate | 12.40% | — |
| (USD) | Jan 2025 | Y/Y change |
|---|---|---|
Cash and short-term investments | 43.21B | 66.29% |
Total assets | 111.60B | 69.79% |
Total liabilities | 32.27B | 41.86% |
Total equity | 79.33B | — |
Shares outstanding | 24.40B | — |
Price to book | 35.72 | — |
Return on assets | 57.88% | — |
Return on capital | 72.51% | — |
| (USD) | Jan 2025 | Y/Y change |
|---|---|---|
Net income | 22.09B | 79.82% |
Cash from operations | 16.63B | 44.61% |
Cash from investing | -7.20B | -17.83% |
Cash from financing | -9.95B | -174.15% |
Net change in cash | -518.00M | -129.42% |
Free cash flow | 9.56B | 33.83% |
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