Here’s why one Wall Street pro is doubling down on Nvidia.
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00:00As far as NVIDIA's valuation, do we think it's overvalued?
00:04So when we're entering kind of the print for NVIDIA, the stock was trading at only about 24 times our calendar 26 estimate.
00:13And that was actually at the low end of their essentially 10-year historical range that we've looked at, especially when you look at it from a PE to growth ratio as well.
00:24This is the company trading towards the lower end of its range.
00:28Clearly, the growth rates are going to decelerate.
00:31They're not going to be anything like we've seen over the last two years.
00:34But what's really important is the free cash flow potential of this company is going to significantly improve.
00:40We expect the free cash flow run rate to exceed $100 billion exiting calendar 25, which would be second to only Apple right now.
00:48And they're probably going to surpass Apple at some point in time.
00:52So when you look at the free cash flow potential of this company, their asset-like business, and the fact that although growth rates are decelerated, they still remain pretty attractive in nature.
01:01The valuation, we think, is actually really compelling at these levels.
01:06And then the fact that you've now de-risked China to a large degree and the belief that we think sovereign AI represents a massive opportunity for this company in the next couple of months and quarters as we see greater news flow there.
01:19I think, yeah, I mean, I think this is far from overvalued.
01:23In fact, I think it's an enticing valuation.