{"id":36626,"date":"2023-11-22T21:57:01","date_gmt":"2023-11-22T21:57:01","guid":{"rendered":"https:\/\/microloannexus.com\/investing\/taking-overvaluation-to-an-artificially-high-level\/"},"modified":"2023-11-22T21:57:02","modified_gmt":"2023-11-22T21:57:02","slug":"taking-overvaluation-to-an-artificially-high-level","status":"publish","type":"post","link":"https:\/\/microloannexus.com\/?p=36626","title":{"rendered":"Taking Overvaluation To An Artificially High Level"},"content":{"rendered":"
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NVIDIA Corp\u2019s
\n NVDA
\n <\/fbs-ticker> stock is up more than 1,200% in the last five years and 238% year-to-date (YTD). However, even after beating fiscal 3Q24 earnings and issuing guidance that surpassed expectations, the future cash flow expectations baked into the current stock price are disconnected from reality. I think they are much too high for any reasonable investor to believe NVIDIA can achieve them. The bottom line is that the fundamentals of the business have not improved at anywhere close to the pace of the meteoric stock rise.<\/p>\n

The artificial intelligence (AI) hype that is driving the company\u2019s stock is similar to the crypto and blockchain hype that drove other stocks to nosebleed heights only to fall back down to earth a few months after the hype wore off.<\/p>\n

Below, I\u2019ll use my reverse discounted cash flow model to illustrate the expectations baked into NVIDIA\u2019s current stock price and quantify just how risky the current valuation is.<\/p>\n

Stock Price Implies NVIDIA\u2019s Revenue Will Be Larger Than Mexico\u2019s GDP<\/strong><\/h3>\n

To justify its current price of $484\/share, my model shows that Nvidia would have to:<\/p>\n