nvidia's $3 trillion valuation faces scrutiny

2025-03-13 nvidia

New York, Thursday, 13 March 2025.
Nvidia’s meteoric rise to a $3 trillion market capitalization is under examination. Aswath Damodaran, a valuation expert from NYU Stern, questions whether the current financial performance justifies such a high valuation. This analysis arrives amid broader discussions about the sustainability of top stocks on Wall Street. Nvidia’s stock price was $117.16, down 1.2%, or $1.42, as of 10:28 a.m. ET today. The expert’s contrarian view challenges the prevailing bullish sentiment surrounding the AI chipmaker.

market performance and historical returns

Nvidia’s stock has demonstrated significant returns, boasting a one-year return of +25.96% [2]. The five-year return is even more impressive at +1,829.35%, with an annualized return of +80.75% [2]. Since its initial public offering (IPO), Nvidia’s return has been +307,610% [2]. In comparison, the S&P’s one-year return is +8.19%, and its five-year return is +106.54%, with a five-year annualized return of +15.61% [2]. The S&P’s return since its IPO is +357% [2]. These figures highlight Nvidia’s exceptional growth trajectory relative to the broader market.

nvidia’s financial overview

Nvidia, an American multinational technology company, was founded in 1993 by Jensen Huang, Chris Malachowsky, and Curtis Priem [3]. The company’s fiscal year 2025 revenue reached US$130.57 billion [3]. Operating income stood at US$81.45 billion, with a net income of US$72.88 billion [3]. Nvidia’s total assets amounted to US$111.60 billion, and total equity was US$79.33 billion [3]. As of fiscal year 2025, the company employed 36,000 individuals [3]. Nvidia designs and supplies graphics processing units (GPUs), application programming interfaces (APIs), and system on a chip units (SoCs) [3].

recent market dynamics and analyst perspectives

The Nasdaq Composite had fallen 13.6% from its closing peak on December 17, 2024, as of March 11, 2025 [7]. Nvidia has experienced a substantial market value decrease, losing roughly $1 trillion since its peak earlier in the year [7]. The stock is down nearly 30% from its peak [7]. Despite this downturn, Nvidia anticipates approximately $43 billion in revenue for the first quarter, representing a 65% increase from the previous year [7]. Demand for Nvidia’s new Blackwell platform is reportedly exceeding supply [7].

competitive positioning and future outlook

Nvidia’s stock currently trades at a forward price-to-earnings (P/E) ratio of 24, which is comparable to the S&P 500’s forward P/E of 20.7 [7]. On March 11, 2025, Nvidia Corp (NVDA) saw a +5.24% increase [6]. Taiwan Semi (TSM) is proposing an Intel foundry joint venture to NVIDIA, AMD, and Broadcom (AVGO) [6]. Credo Technology Holding (CRDO) is showcasing AEC PCIe Products for AI Scaling at NVIDIA GTC 2025 [6]. These developments suggest ongoing innovation and strategic positioning within the AI and technology sectors.

Bronnen

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