Nvidia Valuation by Damodaran

Welcome to the twenty-fifth Pari Passu Newsletter,

Today, we are learning more about Nvidia, and Damodaran’s approach to this very interesting situation. It is always interesting to see big stock movements and try to make sense of fundamentals. Let’s dive in.

Aswath Damodaran is known as the “Dean of Valuation” and reading his work and thoughts is an amazing way to learn. Today, we will learn about Damodaran's analysis of Nvidia, one of the hottest stocks in 2023. He published his analysis here and you can find below the biggest takeaways.

At the beginning of Aswath’s analysis, he humbly admits that he did not have a single idea of AI being the reason for the growth in his initial holding of Nvidia. An interesting lesson that he explains early from this development is that when it comes to buying and holding companies for the long term, it is better to be in the right place at the right time, rather than “being smart”. In other words, he has experienced more success in holding stocks over a long period of time and being lucky with its major success in a particular market instead of trying to time the buying of companies at the perfect time of a market boom. That being said, let’s dive into how we can successfully value AI in Nvidia’s business.

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