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Nvidia Stock Could Rise 45%

InvestorPlace2022-04-11

Investors should be happy with Nvidia (NASDAQ:NVDA). The chip design company decided in February to cancel its dilutive merger with ARM Ltdfrom Softbank(OTCMKTS:SFTBY). That will allow shareholders to not be diluted by the extra shares for ARM. That could help NVDA stock rise, assuming the company’s growth stays on track.

Moreover, it expects its first quarter 2022 revenue, which will come out on May 25, will be at least $8.1 billion up from $7.66 billion this past quarter. That works out to a consecutive compound growth rate of 26.1%. Moreover, on a year-over-year (YoY) basis, that will be 43.1% higher than the $5.66 billion in revenue last year. If its YoY growth keeps up at that pace, NVDA stock could be in for another great year.

So far, year-to-date (YTD) the stock is down 21.4% as of April 8 at $231.26, down from $294.11 at the end of 2021. That is quite a change from last year when it rose 125.2%.

Assuming Nvidia can make the same level of profits and free cash flow (FCF) as before, the stock could find its way back into positive territory. That assumes that its growth rate keeps at its blistering pace as in the past.

For example, for the fiscal year that ended Jan. 30, 2022, the company generated over $8.13 billion in FCF. This works out to a FCF margin of 30.2% on its $26.9 billion in revenue.

But in the fourth quarter its FCF margin rose to over 36% when it produced $2.76 billion in FCF on $7.64 billion in revenue. The point is if that same margin keeps up for the year ending 2023, it could show huge amounts of FCF.

Analysts now estimate that revenue will rise 30% to $34.9 billion. Applying a 36% margin to that figure means FCF could reach $12.56 billion. That is over 54.5% from the $8.1 billion in FCF last year.

But it also could push the stock market value higher. For example, assuming the market values Nvidia with a 1.5% FCF yield, its market value will be $847.33 billion (i.e., $12.56b/0.15). This is 45.3% higher than its $576 billion market value today.

In this scenario NVDA could be worth 45.3% more, or $336.25 per share. This shows that there is a path for NVDA stock to move higher.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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Comment23

  • VivianChua
    ·2022-04-11
    Good Choice💚💚💚
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  • LimLS
    ·2022-04-11
    NVDA is without a doubt a great company to own. But do your due diligence on its valuation. Among the semiconductor, they are still overvalued. A great company to pick up in the low 200s or even better below 200. Can it rise another 45%? Sure it can. But it will be even more overvalued by then.
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    • Kelvin_Qiu
      [Like]
      2022-04-11
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    • Ironman2002
      Yes. Nvidia deserves some premium and at low 200’s. i will increase my position if it dip to below 200😀
      2022-04-11
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  • och
    ·2022-04-11
    K
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  • kennykjj
    ·2022-04-11
    Great
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    • och
      k
      2022-04-11
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  • LEESIMON
    ·2022-04-11
    NVDA is Great to own
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  • ZenInv
    ·2022-04-11
    If not more!
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  • Sunshinekim
    ·2022-04-11
    Great news. Keep our fingers crossed! 
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    • myLaohor
      likes
      2022-04-11
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  • dereklim1985
    ·2022-04-11
    bought~
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  • janelie
    ·2022-04-11
    Buy buyy
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  • Bspn
    ·2022-04-11
    Ok
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  • AdelGYS
    ·2022-04-11
    Good to hear that👏
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  • SLHengHuat
    ·2022-04-11
    Can buy
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  • phongy 45
    ·2022-04-11
    Good 
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  • Remotecam
    ·2022-04-11
    Market makers play $NVIDIA Corp(NVDA)$stock like a bouncing ball.  Huge value swings is normal for this counter, depending on overall market sentiments.  It's probably safe to bag hold if you bought high. Bottom fishing at around $216 support may arise again this round of correction.  But you never really know where the bottom is nowadays, especially with fear mongers using 2023 recession to push down stock prices presently. 
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    • Rac72
      👍🏻
      2022-04-20
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    • KittyBruno
      Patience is key when investing. Rome was not built in a day. If you keep this in mind, then you ignore short term headwinds & focus on long term.
      2022-04-11
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    • ececec
      go go go
      2022-04-11
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  • NJHJ
    ·2022-04-11
    like and comment please
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    • ycheong
      ok
      2022-04-11
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    • Irene104
      Ok
      2022-04-11
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  • Gackky
    ·2022-04-11
    fly this week.. fly fly fly
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  • ming22
    ·2022-04-11
    Oh wow... 🚀🚀🚀... Will others also rise... 
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  • Heng08
    ·2022-04-11
    Like pls 
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    • kenong62
      ok done
      2022-04-11
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  • Boink
    ·2022-04-11
    Buy buy buy mai tu liao 
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    • YiiYii
      [Miser]
      2022-04-11
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  • jayfalcon
    ·2022-04-11
    Like pls 🙏 thanks
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