Nvidia (NVDA) Stock May Be 27% Undervalued Despite Record Highs Bailey Pemberton Sun, October 11, 2026 at 3:09 PM EDT 4 min read NVDA -0.52% Trade NVIDIA on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
NVIDIA has ridden the AI infrastructure boom to a market value in the trillions, and after such a powerful multi year run, many investors are asking whether the current share price is still grounded in the cash flows the business can generate.
Over the past 5 years, NVIDIA has delivered a very large share price gain of around 953.4%, which puts a lot of weight on the question of how much cash its GPUs and related platforms can ultimately produce.
The historic US$150b increase in share buyback authorization signals management confidence in future cash generation, and may concentrate more of those future cash flows into each remaining share if repurchases are carried out as planned.
What if you looked at NVIDIA through its earnings instead? See what NVIDIA's 28.7x P/E says about the price.
For investors, the debate is whether NVIDIA's current price is adequately supported by the cash flows implied by a Discounted Cash Flow (DCF) view over the coming years.
If you are questioning whether NVIDIA's cash flows justify this kind of run, it can help to compare that same lens across 92 AI infrastructure stocks.
The Discounted Cash Flow (DCF) model here looks at what NVIDIA could return to shareholders in future and then pulls those dollars back into today's terms. On the latest run, it uses last twelve month free cash flow of about $126.7b as a starting point, then assumes cash generation keeps growing rather than shrinking or merely stabilising.
Those projected cash flows, once discounted, put NVIDIA's estimated intrinsic value meaningfully above the current share price of $229.28. Because that gap appears even after factoring in sizeable free cash flow and a growth path that already bakes in high expectations, it suggests investors are not paying for a collapse in the AI buildout story. Nvidia's record US$150b buyback authorization helps tie this cash generation back to each share, which is one reason the model can still support a value above where the stock trades today. Find out what NVIDIA could be worth using our Discounted Cash Flow (DCF) estimate.
NVIDIA's valuation puzzle only really makes sense once you know which future paths investors are effectively betting on, and that is where Simply Wall St Narratives come in on the Community page. Each narrative ties its number to a concrete view of how NVIDIA's growth, profitability and potential risks might evolve, so you can see which storyline you think best fits the business and then revisit that view as new information arrives.
Community views on NVIDIA split between a cash flow story that still has room to run and a price tag some investors see as already full.
"Nvidia will hit $400b annual revenue in 5 years time, ~90% of revenue will come from data centre customers…"
Discover why this Narrative puts NVIDIA at 33% undervalued.
"Then you write down the share price, and the enthusiasm has to meet arithmetic…"
Explore why this Narrative puts NVIDIA at 15% overvalued.
Valuation models tell one story about NVIDIA, but Simply Wall St's broader checks have also picked up potential concerns that investors may want to weigh carefully before making a decision. Take a closer look at 2 warning signs (1 major) before settling on a valuation.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include NVDA.
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