From Nasdaq:

Aswath Damodaran, known as the “Dean of Valuation,” is widely considered one of the world’s most prominent stock valuation experts. He’s well-regarded for his expertise in corporate finance and valuation and has written extensively on these topics. Damodaran also maintains a website where he regularly shares data on corporate valuations.

One of Damodaran’s theories is about the “Seven Samurai” or the “Magnificent Seven,” which includes Nvidia, Google, Amazon, Apple, Meta Platforms, Microsoft, and Tesla. His view is that these stocks have significantly outperformed the market and have saved investors from back-to-back disastrous years in the stock market.

Nvidia, in particular, has had incredible gains with its share prices shifting by more than 165x over the last 10 years. Despite these impressive figures, Damodaran believes that most of these stocks, including Nvidia, are overvalued.

After an in-depth valuation analysis, Damodaran plans to sell half of his position in Nvidia. While recognizing the company’s strong growth prospects, Damodaran believes that the stock is significantly overvalued, with his valuation model estimating a fair value much lower than the current share price.

He also points this out for investors, advising caution before making a decision to sell their Nvidia stocks. He suggests that the stock is priced for perfection and any interruption in its growth could lead to a significant downturn. However, he also acknowledges that the stock is overvalued.

The investor poses the question of whether to invest in Nvidia and urges caution given the stock’s potential for a major sell-off if its growth trajectory falters.

It’s worth noting that, according to the Motley Fool Stock Advisor analyst team, Nvidia wasn’t one of the ten best stocks for investors to buy now. The service has a solid track record, tripling the return of the S&P 500 since 2002.

Finally, the author discloses that they may have positions in certain stocks mentioned, and The Motley Fool has positions in and recommends various stocks, including Nvidia.



Read more: The “Dean of Valuation” Is Selling Nvidia Stock Hand Over Fist. Should You?