AI's Winners, Losers and Wannabes: An NVIDIA Valuation, with the AI Boost
This valuation analysis examines NVIDIA's intrinsic value amid the AI boom, concluding the stock is overpriced at $409/share versus a modeled value of ~$240/share. The author contextualizes NVIDIA within semiconductor industry cycles and AI's revolutionary potential, using detailed DCF modeling and Monte Carlo simulation to stress-test assumptions around market growth, margins, and reinvestment efficiency.
Metrics in this report
15billion USD
estimated
2022 total addressable market
80percent
estimated
2022 AI-optimized chip market dominance
12.21percent
industry average
US semiconductor companies, used in valuation
42.5percent
actual
2020 R&D-adjusted margin
38.4percent
actual
2021 R&D-adjusted margin
240USD per share
modeled
DCF valuation as of June 10, 2023
24.42percent
actual
2021-2023 period
0.65dollars of sales per dollar of capital
actual
2022, indicating capital intensity
409USD per share
actual
June 10, 2023 (risen to $434 by June 20, 2023)
8.85percent
average
Drift target for NVIDIA as cyclicality decreases
200-300billion USD
target
2030 forecast range for total AI chip market
37.83percent
target
NVIDIA 2021-2023, author's capitalized R&D treatment
3.97percent
average
2011-2020 period, indicates maturation from prior decades
1.15dollars of sales per dollar of capital
median
Global semiconductor industry average