Parkev Tatevosian, CFA on $NVDA (Oct 28, 2026)
NVDA is the speaker's top stock to buy now with a very attractive risk-reward: at a forward P/E of 13.6, near a multi-year low, he estimates over $190 billion of free cash flow this fiscal year ending January 2027 and $475 billion by 2030, aided by a 70%-90% data-center GPU share; he owns shares and wants to add more.
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SpaceX and Elon Musk delivered great news to Nvidia stock investors, as the company announced it would borrow $40 billion to purchase graphics processing units (GPUs) from Nvidia.
Now, I wanted to share the details of this announcement with you and discuss Nvidia, take a look at its valuation, and reiterate and share my estimates of what I believe to be a fair value for Nvidia stock and whether I see it as a buying opportunity right now.
Musk went on to say that SpaceX had incurred $40 billion in debt for Nvidia's graphics processing units (GPUs) for artificial intelligence, but stressed that the space company has an investment-grade rating and revenue from Starlink and rocket launches.
Nvidia stock is currently trading at a forward price-to-earnings ratio of just 13.6, which is close to its lowest trading level according to this metric in several years. Investors are concerned that Nvidia doesn't have much upside potential from here.
Estimates already point to a massive free cash flow over the next few years, and its market value is already over 5 trillion. To be more precise, its market value is over 5.2 trillion.
Speaking of cash flows, I estimate that Nvidia will generate more than $190 billion in free cash flow in its current fiscal year, which will end in January 2027.
Furthermore, I expect free cash flow to grow to $475 billion by 2030. $475 billion. Absolutely unbelievable.
But if we are to believe the estimates regarding spending figures on data centers, this is a reasonable estimate. Given Nvidia's market share in this category, and its dominant position in graphics processing units (GPUs), which remain the most important component going into these positions, and despite the increasing importance of central processing units (CPUs) and memory, the graphics processing unit remains the essential component.
It is reasonable to assume that Nvidia could capture a significant share of this total spending.
Two-thirds is the value of the components that go into those buildings, and a large proportion of these two-thirds are components from Nvidia. Remember that Nvidia doesn't just have a central processing unit (CPU), it has a complete and comprehensive offering.
Or they can simply rely on Nvidia for the complete package, everything they need to run an entire data center. Some companies choose to rely on Nvidia's complete package, while others prefer to assemble their own data center components.
Regardless, Nvidia's graphics processing units remain a core component in many of these data centers.
The market share of graphics processing units in data centers is estimated to be between 70% and 90%, depending on the source of these estimates.
Therefore, it is not surprising that you will find me placing Nvidia at the top of the list of stocks you can buy right now, with a high level of confidence in this ranking.
I own Nvidia shares in my investment portfolio. It is one of my largest investment centers, and I am interested in adding more of them. So, this was another great piece of news for Nvidia stock investors that came from Elon Musk and SpaceX.
But I feel that the risk-reward ratio is very attractive to investors in Nvidia stock at the moment.
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What this channel has said about $NVDA
Parkev Tatevosian, CFA has 25 calls on this stock; only the adjacent ones are shown.