Relative Valuation of Nvidia Corporation

Abstract

This thematic paper applies a relative valuation approach to estimate the target value of NVIDIA Corporation (NVDA). Historical multiple bands are used to assess whether the current market price is overvalued or undervalued relative to NVIDIA’s 5-year average. Based on trailing and forward P/E and EV/EBITDA multiples, NVIDIA appears moderately undervalued, reflecting strong earnings growth and margin expansion. However, the company trades at a significant premium on a Price-to-Book (P/B) basis, indicating high investor confidence in its intangible assets and future growth potential. Peer group multiples and financial ratios are also analyzed to validate the comparability of selected peers AMD, Broadcom (AVGO), TSMC, and Intel (INTC). While NVIDIA shares operational similarities with these firms, its unique positioning in AI infrastructure and superior profitability metrics justify its valuation premium. The historical valuation method is deemed most appropriate for this analysis, given the volatility of forward estimates and sector-specific dynamics. Using NVIDIA’s 5-year average multiples, the derived target price suggests limited short-term upside from current levels. As a result, this paper recommends a “HOLD” rating, acknowledging that while NVIDIA’s fundamentals remain strong, much of its growth potential is already priced in. Strategic factors such as AI leadership, ecosystem integration, and macroeconomic risks should also be considered in future investment decisions.