Damodaran’s High Stakes Move
Aswath Damodaran, known as the “Dean of Valuation”, is a distinguished voice in the corporate finance and valuation spheres. Renowned for his expertise, Damodaran’s recent notable act of selling off Nvidia stock has set off alarm bells in the financial world. His actions have captured the attention of investors and analysts alike.
Image source: Nvidia.
Damodaran’s assessment of the “Seven Samurai”
Anchoring his perspective on the “Seven Samurai,” which includes Nvidia, Google parent Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Tesla, Damodaran likened these companies to a heroic band, saving investors from stock market peril. He underlined their staggering market cap growth over the last decade and Nvidia’s meteoric rise as the standout performer among the group.
Damodaran’s View on Nvidia
Damodaran views Nvidia as the most overvalued player among the “Seven Samurai.” Despite his positive forecasts for the company’s revenue growth and operating margin, he bluntly states that Nvidia is simply too expensive based on his valuation model, signaling a clear divergence from its current stock price.
Weighing the Odds
While Damodaran’s divestment may raise concerns, investors can’t ignore the possibility of unforeseen developments in artificial intelligence (AI) significantly driving Nvidia’s future growth. Nevertheless, it is crucial to acknowledge that Nvidia’s current valuation suggests a precarious position, susceptible to the stormy repercussions of any potential downturn, but also presenting a potential buying opportunity.
Considering the Future
While Damodaran’s discerning move prompts skepticism, investors should tread carefully. Nvidia’s position may be precarious, but it still holds the potential for resilience. The coming days will reveal whether the “Magnificent Seven” will continue their triumphant fight, or if the castle may be built on shaky grounds, as per Damodaran’s warnings.
