NVIDIA Corporation (NVDA)

Conclusion

NVIDIA designs accelerated computing and networking platforms for data centres and artificial intelligence, and also sells graphics processors for gaming, professional visualisation and automotive markets. At 186.64 USD on 6 November 2026, the market capitalisation is 4.51 trillion USD.

The verdict is fair. The fair value band runs from 146.15 to 219.22 USD with a midpoint of 182.68 USD, giving a margin of safety of -2.1% at the current price. Against their own ten-year medians, the price-to-earnings ratio of 23.37 sits at a premium of -56.2%, and enterprise value to EBITDA of 19.01 at -57.6%. The discounted cash flow gives 86.38 USD per share at a discount rate of 16.1%, while the fair value from historical multiples is 278.99 USD. The reverse DCF implies growth of 27.9% a year, against revenue growth of 66.9% a year over the last five years.

The case rests on return on invested capital of 116.0% against a WACC of 16.0%, an operating margin of 65.2%, and net cash, with net debt to EBITDA at -0.26. It would weaken on the weakest numbers: the Beneish M-score of -1.27, which the model reads as a likely manipulation pattern, free cash flow conversion of 65.9% over the last twelve months against 83.0% over five years, and a Piotroski score of 4 out of 9.

Financial health

Financial strength is green, held up by all four measures that were assessed good: a current ratio of 4.59, net debt to EBITDA of -0.26 (a net cash position), interest coverage of 497.2 times and an Altman Z-score of 34.48. The quick ratio of 3.78 and debt to equity of 0.17 point the same way. The Altman Z-score sits in the safe zone, though the model was designed mainly for manufacturers, and the company's business is only partly a manufacturing one. Insolvency risk is low, about 0.0% by the estimate of the Ohlson model over one to two years. The company has no debt burden to speak of, and the balance sheet offers little reason for concern.

Earnings quality

Earnings quality is yellow. Free cash flow conversion is 65.9% on a trailing twelve-month basis and 83.0% over five years, so the most recent year converted less of its earnings into cash than the longer run. The accrual ratio is 0.109. Stock-based compensation is 2.4% of revenue, and free cash flow after it is 119.76 billion USD. The share count fell at a compound rate of -0.5% over five years, which reflects buybacks. The Piotroski score is 4 out of 9. The Beneish M-score of -1.27 is rated bad by the scorecard. On the positive side, the company beat estimates in all eight of the last quarters, by an average of 5.6%, and analysts raised next-year estimates in seven of the last thirty days, with none lowering them.

Profitability

Profitability is green. Margins sit well above their ten-year medians: gross margin is 74.7% against 62.2%, operating margin 65.2% against 32.8%, and net margin 63.7% against 33.4%. Operating margin stability is 0.4001. Return on invested capital is 116.0% against a WACC of 16.0%, and the given gap between them is 99.99%. The five-year median of return on invested capital is 103.1%. Return on equity of 84.2% is not mainly a product of leverage: the DuPont split shows a net margin of 55.6%, an asset turnover of 1.04x and an equity multiplier of only 1.31x. The returns come from the operations rather than from borrowing.

Growth

Growth is green. Revenue has compounded at 100.1% a year over three years, 66.9% over five years and 45.7% over ten years. Earnings per share compounded at 204.1% over three years, 95.3% over five and 68.2% over ten. Revenue grew in nine of the ten comparable years. The next-year earnings estimate points to growth of 70.9%, with estimates revised up by 24.2% over the last ninety days. The three-year pace is well above the longer-term rates, so the question for investors is how much of that surge can persist.

Valuation

Valuation is yellow. Every multiple sits below its own ten-year median: price-to-earnings at 23.37 against 53.37 (a premium of -56.2%), price to free cash flow at 35.48 against 53.04 (-33.1%), and price to book at 19.68 against 22.84 (-13.8%). The discounted cash flow gives 86.38 USD per share at a discount rate of 16.1%, with a terminal value share of 37.9%. The reverse DCF implies growth of 27.9% a year, against revenue growth of 66.9% a year over five years and free cash flow per share growth of 84.0% a year. The fair value band is an order of magnitude built on fixed assumptions, including a 5% equity risk premium and capped growth, and is not a price target. The free cash flow yield is 2.8% and the dividend yield 0.15%, with a payout of 5.3% of free cash flow.

Risks

The weakest numbers would each do damage if they worsened. A Beneish M-score of -1.27 suggests the reported earnings may need closer scrutiny, and a fall in free cash flow conversion from its five-year level would show up as weaker cash backing for profit. A Piotroski score of 4 out of 9 means fewer quality tests are passed than the strongest companies pass. The beta of 2.247 means the share price can move sharply with the market. The margin of safety of -2.1% leaves little room for error, and the DCF rests on a 16.1% discount rate. No values were unavailable in this assessment. This analysis has limits: it has no debt maturity schedule and no revenue breakdown by segment, so it cannot show how exposed each business line is to a slowdown.