NVIDIA (NVDA): fair value

Fair-value band

The normal range for this name runs from $173 (cheap) to $495 (expensive); it is now priced at $217.

That is 1.1σ below this name's own normal premium.

Is NVIDIA undervalued?

Fair, relative to its own history. NVIDIA trades at $217, 37% below the fair value this model estimates, but it has habitually traded 2% below fair value, and today's gap is 1.1σ below that norm, within the range it normally trades in, so the verdict is Fair: priced normally for itself, not necessarily fairly valued.

Diligence checklist

7 pass · 2 fail · 2 no data

• PASSCash actually collected from profit, last 12 months: 90%XBRL · Nvidia gets $0.90 of real cash for every $1 of reported profit which means profits are real and not just numbers on paper. That's a good sign. It dipped below 70 cents in 1 of the last 3 years. One year is a wobble; two would end the work.
• FAILGap between paper profit and real cash: +25.4%XBRL · Nvidia booked more profit than it collected, by 25.4% of everything it owns. I flag anything past 5% either way, and this is the direction that worries me: the further profit runs ahead of cash, the more of it is an accounting entry waiting to be reversed.
• PASSDebt compared to one year of cash earnings: 0.05xXBRL · Nvidia could pay off everything it owes, net of the cash it holds, with 0.05 of a single year's earnings. My limit for a name I would buy is three years, so debt is not a risk here.
• PASSHow much more it earns on capital than that capital costs: +54.27ppXBRL · Return on capital is far higher than what that capital costs, so every dollar Nvidia puts to work turns into much more than a dollar of value. A +54 point gap is enormous. This is one of the best capital-compounding machines that exists. The gap is wider than it was at the start of the window.
• FAILStock sold by executives and directors on the open market, last 6 months: $1,357.1MEDGAR (dealbreaker) · Stevens Mark A sold $1,353.7M of stock in the last 6 months, outside any pre-planned selling schedule, and $1,357.1M went out that way in total. My rulebook says more than $5 million of this kind of selling is disqualifying for a "long" position (buying the stock). The full list of open-market sellers: Stevens Mark A $1,353.7M, Neal Stephen C $3.3M. A further $21.1M went out under pre-planned 10b5-1 schedules, which I don't count: those sales are set up months ahead and say nothing about what management thinks today. Options being exercised, and shares held back to cover the tax on them, are not sales and I don't count them either. filing ↗
• N/AHow long the CEO has run this company: n/aTEXT · I couldn't establish when Nvidia's current chief executive took the job: no appointment appears in the 8-K item 5.02 history.
• PASSProfit margin held up during the last sales slump: 61.7% vs 60.7% baseXBRL · The last time Nvidia's revenue fell, its profit margin per unit sold only slipped a little, from about 60.7% to 61.7%. It means Nvidia isn't being forced to cut prices to keep product moving, which is what a company with a weak competitive position has to do. This is the accounts talking, not the filing: I'm reading the 4 quarters from April 2019 to January 2020, measured against the year going into it, and a shift in what the company sold can imitate pricing power either way.
• PASSNormal profit margin across a full business cycle: FCF margin 42.0% vs 44.9% medianXBRL · Nvidia's current cash margin (42.0%) sits a little below its long-run average (44.9%). My valuation grows the average, so a soft patch doesn't get written into the value as if it were permanent. Across the window the margin ran between 30.9% in January 2022 and 50.1% in October 2024.
• N/AHow much of the stock trades on an average day: $24,628MMARKET · Nvidia trades so much volume that this basically isn't a concern. There's no pass or fail here because the answer depends on how big a position I'd actually want to take.
• PASSShare of revenue from its single biggest customer: 22%TEXT · Nvidia's February 25, 2026 10-K names a customer at 22% of revenue, in its own words: "For fiscal year 2026, sales to one direct customer represented 22% of total revenue and sales to another direct customer represented 14% of total revenue, all of which were primarily attributable to the Compute & Networking segment". That's inside the quarter-of-revenue line where I stop work, but it is worth knowing whose buying decision moves the top line. filing ↗
• PASSWhether the company switched auditors in the last 2 years: noneEDGAR · Companies sometimes switch accounting auditors right before something bad is uncovered which can be a warning sign. Nvidia hasn't changed auditors in the last 2 years, so there's no such red flag here.