Wall Street bull and bear fiercely debated! NVIDIA Corporation (NVDA.US) high-level callback, boldly predicts stock price may rebound by 400%
Many investors believe that the rebound in NVIDIA's stock price is only a matter of time.
In recent months, there has been continuous debate on Wall Street regarding the valuation and prospects of NVIDIA Corporation (NVDA.US). With its core competitive advantage in the AI chip field, NVIDIA Corporation's stock soared by 1180% in three years, before falling back down by 36% from its peak, and currently returning to levels from a year ago.
Many investors believe that this round of sell-off lacks fundamental support, and with the company's latest performance forecasts, a rebound in NVIDIA Corporation's stock price is just a matter of time. A highly esteemed financial model predicts that NVIDIA Corporation's stock price should be above $900.
It is understood that analysts on Wall Street will use electronic spreadsheets containing historical data, sales and profit expectations, and various financial ratios to predict the direction of stock prices. They will adjust financial models based on the latest data to predict what the stock price "should" reach. Due to the different formulas used by different analysts and investment banks, there will be different recommendations and target prices.
UBS Group AG analysts have taken a different approach. The company's HOLT platform is one of the most respected quantitative investment models in the industry. The UBS Group AG website states: "HOLT's proprietary approach corrects the subjectivity in company financial statements by converting income statement and balance sheet information into Cash Flow Return on Investment (CFROI), which better reflects the company's fundamental financial situation." This method focuses on "the historical ability of companies to create wealth and evaluates whether the market has priced their value creation prospects reasonably."
The financial model makes a shocking prediction for NVIDIA Corporation. "We believe the stock price should rise by 400%," said John Talbott, Head of HOLT US Technology Research at HOLT. If his calculations are correct, the market value of NVIDIA Corporation will exceed $22 trillion, while at the time of writing, its market value is $446 billion. Talbott stated, "This is an unacceptable number for investors. This is the biggest resistance I have encountered."
UBS Group AG believes that many accounting indicators distort the true value of companies. CFROI eliminates these distortions and focuses on a key point: the cash flow that companies receive relative to their investments. By removing factors that distort data, such as stock incentives, investors can have a clearer understanding of a stock's actual value.
The average CFROI for non-financial companies is 6%, while NVIDIA Corporation's CFROI is as high as 73%, ranking in the top 0.1% among the 20,000 companies in the HOLT database. Talbott said, "We have never seen such a situation in our system - it's unbelievable."
This is not the first time analysts have predicted that NVIDIA Corporation's market value will exceed $20 trillion. Some analysts even predict that its market value will reach $50 trillion, although they also acknowledge that this possibility is relatively low.
Motley Fool analyst Danny Vena believes that, even though these predictions are very high, the direction is likely correct.
Vena said, "The current market sentiment is overly pessimistic. NVIDIA Corporation's stock price is only 22 times next year's expected sales, entering Beijing Zhidemai Technology."
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