Nvidia Valuation Note
please note this is not financial advice and people should do their own research and I do hold positions in NVIDIA
FAIR VALUE BY KPI
Nvidia Valuation Note
An evaluation of Nvidia’s fair market value was undertaken using relative comparisons against other large technology peers — Microsoft, Apple, Alphabet, and Meta. The framework considers profitability, growth, efficiency, and risk concentration, then adjusts valuation multiples accordingly.
- Microsoft: Provides the benchmark for scale and diversification, with steady 12% forward growth, margins in the mid-30s, and a P/E around 30×. Nvidia’s higher margins and much stronger growth suggest a premium multiple, but Microsoft anchors the comparison for stability and breadth of business lines.
- Apple: Represents the lower-growth, high-cashflow peer. Its forward growth (~7%) and 25× P/E highlight the ceiling for mature megacaps with strong brands but limited expansion. Apple’s lower growth justifies a much lower PEG ratio, making Nvidia’s 40%+ growth look exceptional.
- Alphabet (Google): Offers a mid-point case with 10% growth and 25× P/E. It illustrates how large, diversified platforms are valued when they have strong but not hyper-growth businesses. Nvidia’s concentration in one segment increases risk compared to Alphabet’s breadth, which tempers the valuation premium.
- Meta: Despite the highest gross margins (~82%), its growth (~15%) is well below Nvidia’s. At a P/E of ~22× and PEG ~1.5, Meta shows that even dominant profitability doesn’t justify high multiples without sustained growth. Nvidia’s superior growth trajectory makes its PEG near 1 look undervalued by comparison.
Valuation outcome:
- Peer PEG averages ~2.5. Applied to Nvidia’s 42% forward growth implies a P/E of ~105×.
- Adjusting for risk concentration (single-product exposure) and scaling by its superior margins and ROE yields a fair multiple of ~68×.
- With forward net income of
$73B, this equates to a **$5 trillion** market capitalization.
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