Are NVIDIA Shares Still Worth the Price After UK Datacenter Investment News?
Thinking about what to do with your NVIDIA shares? You’re not alone. Whether you’ve been riding the wave since the early days or just now looking at that ticker symbol, NVIDIA’s recent moves have certainly put it on everyone’s radar. Just this past week, the stock jumped 6.5%, bouncing back after a minor 1.5% stumble over the past month. For the year-to-date, that’s an impressive climb of 28.6%, while the longer view is almost jaw-dropping: up more than 1,200% over three years and over 1,300% across five years. Those numbers are hard to ignore, especially when the headlines keep NVIDIA front and center in the tech world.
Recent news about NVIDIA partnering with global players on massive datacenter investments underscores the company’s persistent growth narrative. At the same time, the company has faced new challenges, like scaling back some cloud services to focus on core strengths and seeing competition rise from major clients developing their own AI chips. The market is taking it all in stride, recalibrating its expectations and risk appetite in real time.
If you’re wondering if all that momentum is baked into today’s price or if there’s more room to grow, here’s a good starting point: by our scorecard, NVIDIA clocks a valuation score of 2 out of 6. That means it’s undervalued in only two key checks, something we’ll break down together, step by step. In the next section, I’ll walk you through these valuation methods to put today’s price in context, and stick around for a smarter way to assess true value at the end.
NVIDIA scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow (DCF) model works by forecasting a company’s future free cash flows and then discounting those back to their present value. This gives investors an estimate of what the business is really worth today, based on its expected ability to generate cash in the future.
For NVIDIA, the current Free Cash Flow is $72.28 Billion. Analysts forecast this number to grow rapidly over the upcoming years, reaching a projected $249.21 Billion by 2030. Estimates are solid for the next five years; after that, Simply Wall St algorithmically extends the projections further, reflecting optimism around NVIDIA’s continuing innovation and market expansion.
Using these projections and discounting them to today’s dollars, the DCF model calculates an intrinsic value of $143.89 per share. This valuation suggests NVIDIA shares are around 23.6% overvalued compared to the current stock price.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests NVIDIA may be overvalued by 23.6%. Find undervalued stocks or create your own screener to find better value opportunities.
The Price-to-Earnings (PE) ratio is a popular valuation metric for profitable companies like NVIDIA, as it gives investors a sense of how much they are paying for each dollar of current earnings. When a company is consistently profitable and growing, the PE ratio helps put its valuation into perspective compared to both industry norms and direct competitors.
Growth expectations and perceived risk play a big role in determining what constitutes a “normal” or “fair” PE. Fast-growing companies often command higher PE ratios, while those facing greater risk or slower growth typically see lower multiples.
Currently, NVIDIA trades at a PE ratio of 49.9x. This is above the semiconductor industry average of 33.1x but below the average among its peer group, which is 57.0x. To provide a deeper comparison, Simply Wall St calculates a proprietary “Fair Ratio,” which for NVIDIA is 50.8x.
The Fair Ratio is a more comprehensive measure than just comparing with peers or industry averages. It accounts for the unique combination of NVIDIA’s earnings growth, industry, profit margins, scale, and risk profile. This approach gives a clearer picture of what a reasonable valuation multiple should actually be for a company like NVIDIA.
Compared to its Fair Ratio of 50.8x, NVIDIA’s current PE of 49.9x suggests the stock price is about right based on the earnings multiple. Investors should see this as an indication that the market is pricing NVIDIA’s growth prospects and risks quite efficiently at the moment.
Result: ABOUT RIGHT
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.
Earlier we mentioned that there’s an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a simple, intuitive way for you to express your own perspective about a company, putting your story, expectations, and assumptions about NVIDIA’s future right alongside the numbers. Rather than just relying on formulas, Narratives allow you to connect the company’s business trajectory, financial forecasts, and estimated fair value into one coherent view that you can revisit and adjust over time.
On Simply Wall St’s Community page, Narratives are an easy-to-use tool embraced by millions of investors. They help you see at a glance whether NVIDIA’s current price lines up with your own fair value assessment, making it clearer when you think it’s time to buy or sell. Narratives also update dynamically as new information comes in, meaning your valuation stays relevant whether there has just been an earnings release, a product launch, or major industry news.
One glance at NVIDIA’s Community Narratives shows how views can differ: the most bullish Narrative estimates fair value at $341.12, while the most cautious puts it at $67.95. Narratives let you track both your beliefs and the crowd’s, giving you the power to invest with conviction.
For NVIDIA, we will make it easy for you by providing previews of two leading NVIDIA Narratives:
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Fair Value Estimate: $341.12
Current Price is approximately 47.9% below this fair value
Projected Revenue Growth Rate: 25.46%
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Narrative emphasizes NVIDIA’s dominant positioning in AI and data centers, supported by consistent innovation, robust financial strength, and a diversified product portfolio.
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Highlights strong catalysts for further growth, including accelerating AI adoption, automotive expansion, and continued product leadership (CUDA, H100, Blackwell).
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Notes risks around premium valuation, geopolitical exposure, supply chain challenges, and increasing competition. Overall, the narrative views the stock as a compelling long-term opportunity.
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Fair Value Estimate: $141.74
Current Price is approximately 25.4% above this fair value
Projected Revenue Growth Rate: 17.2%
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Narrative focuses on NVIDIA’s unrivaled hardware and software ecosystem driving dominance in AI, data centers, and gaming. It also warns that the current stock price reflects extremely high expectations.
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Details growth in data center and automotive as major opportunities, but points out that margin pressures and increased competition may limit future upside.
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Highlights potential risks from competition (AMD, Intel), product cycle slowdowns, and external factors like regulation or supply chain disruptions. The narrative ultimately sees the current price as demanding near-perfect execution.
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Do you think there’s more to the story for NVIDIA? Create your own Narrative to let the Community know!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include NVDA.
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