Jensen Huang just put his money where his mouth is…
At the recent Goldman Sachs Communacopia and Technology Conference, the Nvidia (NVDA) CEO described his company as the “world’s first and only growth value stock.”
Huang was referring to the unique situation created by Nvidia’s valuation.
The chipmaker has seen massive growth since the start of the AI bull run… But based on valuation metrics like the forward price-to-earnings (P/E) ratio, Nvidia trades for roughly what it did in 2022.
What’s more, Huang’s projections for AI are as bullish as ever. Nvidia’s recent quarterly report forecast sales growth of 70% for the company’s next fiscal year.
In short, Nvidia is growing tremendously, yet trades at a cheap valuation – hence Huang’s claim that it’s both a growth and value stock.
Today, let’s dig into that claim in more detail… and weigh whether Nvidia is an attractive opportunity.
Nvidia Is a Tech Titan With Room to Grow
On September 28, Nvidia ponied up the cash to back up Huang’s words. It announced a record-setting increase to its stock-buyback program…
This increase is 36% bigger than the previous record set by Apple. At $150 billion, it even exceeds the market cap of ride-hailing stock Uber.
The timing here is notable, too. Right now, Nvidia is hovering around all-time highs. Take a look…
Last week, Nvidia surpassed the high it reached in May.
That means management is highly bullish. The higher-ups at Nvidia chose to buy back shares because they think the stock is still a great opportunity at these prices.
Our proprietary Stansberry Score system – which ranks companies by their financials, capital efficiency, and valuation – is turning bullish too. Here’s what it says about Nvidia today…
As you can see, Nvidia earns a Stansberry Score of 80 – giving it an overall “A” grade and putting it in the top 7% of all stocks the system tracks.
Now, our scoring system may not totally agree with Jensen Huang. It gives Nvidia a “C” for valuation. But with management putting skin in the game – and with the company’s strong growth and financials – this AI chipmaker might be trading at fair prices.
Nvidia has beaten market expectations quarter after quarter for years. Based on its current valuation, it’s poised to do so again when it reports earnings in mid-November.
The market is only starting to wake up to this opportunity. That gives the company a long runway for outperformance.
Good investing,
Chris Igou
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Source: Daily Wealth
