If you are wondering whether NVIDIA is still worth buying after its massive run, you are not alone. We are going to unpack what the current price actually implies about future growth.
Even after pulling back around 4.1% over the last week and roughly 9.7% over the past month, the stock is still up about 26.5% year to date and 30.4% over the last year, with multi year returns that have topped 900%.
Recently, NVIDIA has stayed in the spotlight as a key enabler of AI infrastructure and data center build outs, with major cloud providers and enterprise customers racing to secure its GPUs. At the same time, regulatory discussions around high end chip exports and competitive headlines from rival chipmakers have added some volatility and nuance to how the market prices that growth story.
Right now, NVIDIA scores just 2/6 on our valuation checks, which suggests the market is paying up for its prospects, but not every metric says it is significantly overpriced. Next we will walk through different valuation lenses, and then wrap up with a more holistic way to judge whether the current price really matches the company narrative.
NVIDIA scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow, or DCF, model estimates what a company is worth today by projecting its future cash flows and discounting them back to the present. In NVIDIA’s case, the model uses a 2 Stage Free Cash Flow to Equity approach, starting from last twelve month free cash flow of about $78.0 billion and then applying analyst forecasts for the next few years before extrapolating further growth.
Analysts and extrapolations see NVIDIA’s free cash flow rising to roughly $287.5 billion by 2030, with the years in between stepping up rapidly as AI data center spending and GPU demand flow through. All these future cash flows in dollars are then discounted back to today’s value, producing an estimated fair value of about $165.32 per share.
Compared with the current share price, that DCF output suggests NVIDIA is around 5.9% overvalued, which is a relatively small gap and well within a reasonable margin of error for long term forecasts.
Result: ABOUT RIGHT
NVIDIA is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment’s notice. Track the value in your watchlist or portfolio and be alerted on when to act.
NVDA Discounted Cash Flow as at Dec 2025
For a highly profitable business like NVIDIA, the price to earnings ratio is a useful shorthand for how much investors are willing to pay today for each dollar of current earnings. In general, faster growth and lower perceived risk justify a higher, or more expensive, PE multiple, while slower growth or higher risk usually mean a lower, or cheaper, PE looks more reasonable.
NVIDIA currently trades at about 42.87x earnings. That is above the broader Semiconductor industry average of roughly 37.03x, but below the 62.27x average of its closest high growth peers. To refine that comparison, Simply Wall St also uses a proprietary “Fair Ratio,” which estimates what NVIDIA’s PE should be given its earnings growth profile, margins, industry, market cap and risk factors.
Because this Fair Ratio is tailored to NVIDIA’s fundamentals rather than a blunt peer or sector comparison, it can be a more reliable guide to what is “normal” for this specific business. In NVIDIA’s case, the Fair Ratio comes out at around 58.23x, comfortably above the current 42.87x. This indicates that the market is pricing in less growth than the model suggests is justified.
Result: UNDERVALUED
NasdaqGS:NVDA PE Ratio as at Dec 2025
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Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to turn your view of NVIDIA into a story that links the business, a financial forecast and a fair value estimate. A Narrative starts with your perspective on the company and then translates that story into assumptions about future revenue, earnings and margins. These assumptions flow through to a fair value you can directly compare with the current share price to decide whether to buy, hold or sell. On Simply Wall St, Narratives are an easy to use tool available in the Community page, where millions of investors share and refine these story driven valuations. They update dynamically whenever new information such as earnings results or major news is released. For NVIDIA, for example, one investor Narrative might assume a fair value near the upper end of recent community estimates, with sustained AI dominance and $400b plus revenue. Another might sit closer to the lowest fair values, expecting slower growth, rising competition and more normal profit margins. Narratives make those differences transparent instead of leaving them hidden behind a single PE number.
For NVIDIA however we will make it really easy for you with previews of two leading NVIDIA Narratives:
🐂 NVIDIA Bull Case
Fair value: $250.39
Implied undervaluation vs last close: approximately 30.1%
Forecast revenue growth: 30.75%
Expects surging AI adoption and multi year data center investment to support strong, compounding revenue and earnings growth.
Sees NVIDIA’s full stack platform and rapid product cadence as reinforcing pricing power, high margins and deep customer lock in.
Flags geopolitical, supply chain and hyperscaler in house chip risks, but still concludes that the stock looks attractive at current levels.
🐻 NVIDIA Bear Case
Fair value: $90.15
Implied overvaluation vs last close: approximately 94.1%
Forecast revenue growth: 15.93%
Argues that NVIDIA is priced for perfection with AI leadership already fully reflected in today’s valuation.
Highlights rising competitive threats from custom silicon, alternative AI hardware and more efficient software that could erode margins and share.
Builds a DCF using slower growth, margin compression and a lower future PE multiple, leading to a much lower fair value than the current price.
Together, these two Narratives frame the current debate, from a scenario where NVIDIA’s AI dominance still leaves room for upside, to one where competition, regulation and more modest long term economics make today’s valuation hard to justify. The next step is to decide which story best matches your own expectations for AI demand, competitive dynamics and NVIDIA’s ability to sustain its edge.
Do you think there’s more to the story for NVIDIA? Head over to our Community to see what others are saying!
NasdaqGS:NVDA 1-Year Stock Price Chart
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include NVDA.
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