From Nasdaq: 2024-06-29 03:28:00

Nvidia’s high price-to-earnings ratio of nearly 74 has investors questioning if the stock is overvalued. Despite this, 21 out of 36 analysts rate Nvidia as a buy or strong buy, suggesting they believe the stock is undervalued due to projected growth.

To be considered undervalued based on the PEG ratio, Nvidia would need to achieve annual EPS growth of around 74% over the next five years. Alternatively, a discounted cash flow analysis by NYU finance professor Aswath Damodaran shows that Nvidia’s revenue could increase by 32.2% annually and still be considered overvalued.

While Wall Street projects Nvidia’s earnings to grow by 43.2% annually over the next five years, it may not be enough to bring the stock’s PEG ratio below 1. Despite this, some investors believe Nvidia stock still has room to grow based on momentum and future potential.

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Read more at Nasdaq: Is Nvidia Stock Actually Undervalued?