NVIDIA’s Valuation and AI’s Negative Sum Game — with Aswath Damodaran | Prof G Markets

Market Strategy

Aswath Damodaran highlights Nvidia's opportunistic approach to emerging markets and technologies. He shares his experience of buying Nvidia in 2018, emphasizing the company's ability to benefit from new markets like AI, gaming, and crypto. Despite Nvidia's past market cap drops, Aswath believes that value investors should not dismiss such stocks outright.

Nvidia always seemed to be in the right place at the right time for new markets, whether that was gaming or whether it was crypto. And now with AI, the first time around, you can say they were lucky. But by the time you get to the third time around, this is by design.

Scott Galloway notes the selective resurgence of tech companies, with larger, profitable firms like Nvidia leading the way 1 2.

   

Valuation Assessment

Aswath provides an in-depth analysis of Nvidia's valuation, arguing that its current stock price of $420 is too high even with a bullish stance on the AI market. He explains that even if Nvidia captures 100% of the AI chip market, it would still not justify the current price. Aswath compares this to Tesla's volatile stock behavior, suggesting that Nvidia's valuation may also be subject to significant fluctuations.

You almost have to price in another market out there as big as the AI market that we haven't seen yet, that Nvidia is going to be able to jump into.

Aswath's insights emphasize the risks involved in investing at such high valuations, urging caution for new investors 1 3.