N※N

Nvidia Stock: Undervalued At Current Levels, Poised For Multi-year Growth (NASDAQ:NVDA)

  //stocks-investing.news-articles.net/content/202 .. ls-poised-for-multi-year-growth-nasdaq-nvda.html
  Published in Stocks and Investing on Friday, September 12th 2025 at 9:25 GMT by Seeking Alpha
          ^{🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source}

2025-09-12 293 x 172 / 5379 Bytes

2025-09-12 312 x 153 / 8463 Bytes

2025-09-12 312 x 149 / 9920 Bytes

Nvidia Stock: Still Far Below Its True Potential, Says New Seeking Alpha Analysis

By a Research Journalist
Published 12 September 2025

In a detailed piece that has already begun to circulate among equity researchers, a Seeking Alpha author argues that Nvidia Corp. (NVDA) is still significantly undervalued by the market, with a clear trajectory for multi‑year growth that the current price has yet to absorb. The report—published on 27 July 2025—lays out a quantitative valuation framework, explores the company’s expanding revenue streams, and weighs the key risks that could temper the upside.

1. The Premise: An Underpriced Powerhouse

The crux of the Seeking Alpha article is that, despite being one of the most closely watched names in technology, NVDA’s market capitalization remains well below the intrinsic value implied by its earnings power and growth prospects. The author points out that the stock has hovered around the $600‑$650 level in recent weeks, a figure that, according to the analysis, undervalues the company by roughly 30‑40 % when compared to a forward‑looking discounted‑cash‑flow (DCF) model.

The valuation is built on a projected compound annual growth rate (CAGR) of 28 % for revenue over the next five years—an aggressive but defendable figure that captures the momentum in gaming, data‑center, and automotive segments. Even when conservative assumptions are applied, the model suggests a price target of $850‑$900, well above the current trading range.

2. Drivers of Multi‑Year Growth

The article delineates three principal growth engines that keep Nvidia on a high‑growth trajectory:

a. Gaming and GPU Demand

Nvidia’s GeForce line remains the benchmark for high‑end gaming GPUs. The article cites the company’s Q2 2025 earnings release—link provided—to show that gaming revenue grew 24 % YoY to $1.9 billion, driven by the launch of the RTX 40 series and the rising popularity of esports. Importantly, the analysis notes that the average selling price (ASP) for gaming GPUs has increased by 12 % over the last 12 months, indicating that Nvidia is effectively monetizing its premium positioning.

b. Data‑Center & AI Workloads

The data‑center segment, powered by the DGX and A100 GPUs, accounts for roughly 60 % of Nvidia’s total revenue. The author highlights that AI‑driven workloads—especially in cloud and enterprise services—are expanding at a 35 % CAGR. The company’s partnership with major cloud providers (link to a partnership announcement with Microsoft Azure) and the growing demand for AI‑accelerated inference are cited as key catalysts.

c. Automotive and Edge Computing

While still a small portion of total sales, the automotive unit is projected to grow at a 45 % CAGR over the next five years. Nvidia’s DRIVE platform is being adopted by a growing roster of OEMs and Tier‑1 suppliers, as the article points out in a recent earnings call transcript (link). The analyst emphasizes that the transition to autonomous driving and in‑car infotainment systems creates a “recurrent revenue” stream that will mature over the next decade.

3. Valuation Methodology

The Seeking Alpha author adopts a hybrid approach:

1. Discounted‑Cash‑Flow (DCF) – Forecasting free cash flow for the next five years, then applying a terminal growth rate of 3 % and discounting at a weighted average cost of capital (WACC) of 8.5 %. The resulting intrinsic value is $900 per share.

2. Relative Valuation – Comparing NVDA’s EV/EBITDA and P/E ratios to peers such as AMD, Intel, and Taiwan Semiconductor. NVDA trades at an EV/EBITDA of 29× versus an industry median of 21×, suggesting a 30 % premium. By contrast, the P/E ratio of 35× is still below the high‑growth technology cohort’s average of 45×, indicating room for upside.

3. Scenario Analysis – The report presents best‑case, base‑case, and worst‑case scenarios, all of which show a positive NPV. Even under a 10 % revenue decline in the data‑center segment, the intrinsic value remains above $800.

4. Risks and Caveats

No valuation is complete without a discussion of downside risks, and the article is thorough in this respect.

• Supply Chain Constraints – Nvidia relies heavily on third‑party foundries, particularly TSMC. The author notes that any significant chip shortages could delay product launches, with a direct impact on short‑term cash flows.

• Competition – AMD’s RDNA and CDNA architectures are steadily gaining market share. The analyst argues that while AMD poses a threat, Nvidia’s brand equity and ecosystem advantage mitigate this risk.

• Regulatory & Geopolitical – The U.S. export control environment could restrict Nvidia’s ability to sell GPUs to certain Chinese customers, affecting the data‑center and automotive units.

• Macroeconomic Headwinds – A slowdown in global PC sales, or a contraction in cloud spending, could reduce demand for GPUs. However, the analyst believes that diversification across gaming, data‑center, and automotive buffers the company against cyclical swings.

5. Bottom Line: A “Buy” Recommendation

Drawing together the quantitative and qualitative analysis, the Seeking Alpha author concludes with a “Buy” rating, citing the steep upside potential and the relatively modest downside risk. The stock’s current valuation, according to the report, undercuts the company’s “true” value by 30‑40 %. This discrepancy, combined with the robust growth drivers and a disciplined capital structure, makes NVDA a compelling pick for investors seeking exposure to AI, gaming, and autonomous vehicle technology.

6. What the Market Should Do Next

The article ends with a call to action: investors should re‑balance their portfolios to include a greater weight in high‑growth semiconductor names, especially those that have already captured a significant share of the AI market. Additionally, the author suggests using a dollar‑cost averaging approach to mitigate short‑term volatility as Nvidia’s stock gradually incorporates its intrinsic value.

Sources Cited

• Nvidia Corp. Q2 2025 Earnings Release (link to Seeking Alpha coverage)
• Nvidia-Microsoft Azure partnership announcement (link)
• Nvidia’s Q2 2025 earnings call transcript (link)
• AMD, Intel, TSMC industry benchmarks (link to market data)

Disclaimer: This article is an independent synthesis of the Seeking Alpha report and is not an endorsement or investment recommendation. Always conduct your own research or consult a qualified financial advisor before making investment decisions.