Analyst Note| Abhinav Davuluri, CFA |
On April 12, Nvidia hosted its analyst day at which management provided updates for the firm’s efforts in major segments such as gaming, data center, and automotive, including its first ARM-based server CPU for AI purposes. In our view, the common theme of the presentations was that Nvidia is vying to be more than just a chip provider by offering a platform that layers software and support on top of its hardware products. While we applaud this strategy, we maintain our view that major customers ranging from cloud vendors to automakers pursuing self-driving vehicles could be reluctant placing all their compute eggs in the Nvidia AI basket. We concede Nvidia’s first mover advantage in artificial intelligence and key applications will allow it to generate meaningful growth going forward (mid-teens growth through fiscal 2026). However, we continue to view shares of narrow-moat, positive-trend Nvidia as overvalued relative to our unchanged fair value estimate due to competitive forces that appear disregarded by the current market narrative.