Is $NVDA still a good buy, even after a +2,000% return in 5 years? In today's video, we'll answer a question from @TechPeeves asking for a deep dive into the stock.

Clearly, there are a lot of strong opinions on NVDA. Let me clarify a few common comments that I’m seeing:

1. “You can’t use dividends to value a growth stock.” Again, following the logic of John Burr Williams, a business is worth what you can get out of it—i.e.: dividends—throughout its entire future discounted back to today. In this case, NVDA has substantial value today because it has substantial dividend-paying abilities—both now and in the future.

2. “No one cares about dividends for NVDA.” I agree; now, NVDA pays out 1.3% of its earnings as dividends. That’s meaningless, especially when its stock price goes up 100% in months. However, as stated in the video, the future dividend projection for NVDA IF it can grow earnings at 20% CAGR and starts to payout 70%+ (which it will when it reaches maturity) is $380 billion. Based on the current market value, that’s an 18% yield-on-cost. If you don’t care about current dividends, fine; I don’t, either. But you should care about future ones; they could be massive.

3. “You’re just mad you missed out on NVDA.” People seem to think I’m anti-NVDA here. I’m not. I’m only pointing out that market expectations are roughly equivalent to iPhone-level growth. (20%). If you think it can grow faster than that, then NVDA is still a good value. If you think it can’t do 20%, then it’s overvalued. That’s all; the ultimate decision is yours. I’m just pointing out the expectations today and cautioning that past growth doesn’t indicate that future growth will be as easy. I never said it’s in a bubble or can’t do 20%; you likely know more than I do about that topic. Besides, I own some NVDA as part of my portfolio. Stop saying that I hate it; I don’t.

4. “Valuations are irrelevant.” If that’s the case, you could pay $7 trillion for NVDA, and it wouldn’t be a bad investment. Come on, people. Valuations are difficult, but that doesn’t mean they don’t matter; in the end, valuations are all that matter when it comes to making investments.

5. “You just took a canned growth rate you saw online.” I don’t understand this one. I backed into the 20% growth rate based on the model described in the video; I never even checked the growth rate for NVDA, nor do I check growth rates for any stock. I think they are trash estimates, so I don’t care.

I appreciate all of the great back-and-forth. Keep it civil. We’re all on the same team here—just trying to make smarter investment decisions.


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00:00 - Intro
00:26 - 2,000% in 5 years?!
01:15 - First Level vs. Second Level Thinking
03:28 - The key to Warren Buffett’s success
04:00 - Dividend discount model assumptions
06:59 - Valuing NVDA
11:10 - How hard is 20%+ CAGR for 15 years?
12:16 - It all boils down to this question…
12:45 - Risks to growth
14:11 - Thank you Patreon supporters!

#valuation #nvda #nvidia

DISCLAIMER: This is entertainment only, not investment advice. All opinions expressed are my own. Any stocks or ETFs mentioned may be owned or taken a position within the next 48 hours. Neither the information nor any opinion expressed it so be construed as a solicitation to buy or sell a security of personalized investment, tax, or legal advice. This is prepared for informational purposes only. It does not address specific investment objectives, or the financial situation and the particular needs of any person who may receive this report. The information herein was obtained from various sources. Dividend Growth Machine LLC does not guarantee the accuracy or completeness of the information provided by third parties. The information in this report is given as of the date indicated and is believed to be reliable. Dividend Growth Machine LLC assumes no obligation to update this information or to advise on further developments relating to it.