$NVDA · Dividend Data · 2026-11-05

and giants like Nvidia, which fell 8.49%

The first stock I'll talk about today is Nvidia, whose ticker symbol is NVDA. It is the leader among AI semiconductor companies and its share price is down 8.74% today, down 3.35% year-to-date.

This is happening in a year when its earnings per share (EPS) has grown by 73%, and as I will explain today, the share price has lagged far behind the fundamental growth of the business, which may seem strange to say when its share price has risen by 513% in the last 5 years.

However, it has slowed down a lot, decreasing by 6.5% in the past year. So Nvidia's earnings per share have increased by 1,697% in these 5 years.

The company's free cash flow increased by 1,461%. With a compound annual growth rate of 84.57%, Nvidia is a free cash flow machine.

They are making huge profits. This is 76.34% more than the previous year. The company will release its earnings report on November 17th. I will be following it on this channel, so be sure to like and subscribe if you want to see that video in the future.

However, there is no sign of this growth slowing down. Nvidia has already forecast for the next fiscal year based on their supply growth and chip sales capacity, so the market has had to raise their fiscal year 2028 forecast to 70.1%.

This is year-on-year growth, and why is this happening? Nvidia's entire business is now centered on data centers. 92.5% of revenue came from here in the last quarter and you can see that this is the reason for all their recent growth.

Their data center business has grown by 2,902% in the last 5 years, with a compound annual growth rate of 105%, and their data center revenue in the most recent quarter was $89 billion, up 116% from the previous year.

And this is not just an increase in total revenue, it is also an increase in net profit. Nvidia's profit margins are extremely high—gross margin 75%, net margin 62%, and their business has always been efficient in terms of free cash flow.

This is because their business model is capital-efficient.

Capital expenditure (capex) is very low compared to their operating cash flow, although it is now increasing slightly for building, training, and testing AI data centers.

However, semiconductor companies like Nvidia are making huge profits in the AI business. That's why Nvidia has a market value of $4.41 trillion and was the most valuable company in the world, although it is currently in second place.

So, Nvidia is in such a lucrative position in the AI infrastructure business that the world's most profitable companies are buying their products. Microsoft, Amazon, Oracle, Alphabet, Meta.

All of these companies are building AI data centers.

The question you should ask yourself today is—Microsoft, Amazon, Oracle, Alphabet, Meta, even SpaceX, OpenAI, Anthropic—are any of them finished? Will it go the opposite way? In my opinion, no. I think the matter is quite clear.

This is why Nvidia's business model is so capital-efficient. They don't have to build their own chip manufacturing plants, TSMC takes on that investment and it helps Nvidia generate a lot of free cash flow.

However, a new major cost area in Nvidia's business is memory. The reason for this is the shortage of memory and the massive increase in its price over the past year. So, I'm giving you a little hint that today we will also discuss some companies whose share prices are falling.

Now I know many of you are looking at the 5-year chart of Nvidia shares and thinking, "Hasn't the stock price gone up a lot?" It doesn't seem cheap. Everything about investing is related to business fundamentals.

Nvidia's earnings per share have increased much more than its share price. Its free cash flow has increased even more.

After today's 8% drop, Nvidia is trading at a P/E ratio of 19.68 for fiscal 2027. They have already completed the first and second quarters of 2027. They are going to publish their third quarter 2027 report soon.

So, this is the current year. Next year, i.e. for fiscal year 2028 or calendar year 2027, they expect another 70% revenue growth, which implies a forward PE (P/E) of 11.6 based on today's share price.

If we look at dividenddata.com's PE analyzer, we can see it based on forward or trailing 12-month earnings. So, here is what their income was in the last 12 months. Nvidia's trailing 12-month P/E is 23.11. This is the cheapest in the last 5 years.

Today's Nvidia stock is at its cheapest in the last 5 years. During this time, Nvidia's share price has increased by more than 500% and is now the cheapest on an earnings basis.

And the forward PE (P/E) is in the fifth percentile. Incidentally, this is also true for 10 years. It is in the second percentile in terms of forward PE (P/E) ratio.

Its average was 37.6 and historically Nvidia has traded at a high multiple because it is not a common product. They have a very diverse product. This is an incredibly high-profit business.

This is a low-capital business model, which generates a lot of free cash flow.

We have a tool called 'Fair Value Graph' at dividenddata.com, which calculates the average multiple of a stock at a given time. So, we are now looking at earnings per share (EPS).

The 37.37 PE (P/E) ratio I've been talking about for the last 5 years. If you apply that same multiple to Nvidia's current earnings today, its estimated fair value would be $347.19.

This is 88.5% more than today's price. This puts it in the deep value category, and what I've been saying all year is that Nvidia's shares look pretty cheap right now based on earnings.

If we switch to a trailing 12-month view with adjusted earnings per share, the average for the last 10 years was 51.07, and you will see that its fair value calculation is also continuously increasing along with earnings.

Right now, Nvidia is trading at 49% below fair value based on trailing 12-month earnings, and it looks cheap on all fronts—free cash flow or operating cash flow. Even in terms of income, it seems cheap.

The reality is, if Nvidia continues to grow their earnings per share (EPS) as expected in the coming years, their multiple won't even need to be re-rated to be attractive. If we assume the current PE ratio of 19.7 and simply meet next year's earnings targets—although the future is uncertain—it seems highly feasible for fiscal year 2028.

If Nvidia's stock trades at a PE ratio of 19.7 by the end of fiscal year 2028, its potential share price would be $311. This will be a 70% increase from today's price. And if it continues to achieve its earnings targets in subsequent years, the target share price for fiscal year 2031 would be $523, which is 187% higher than the current level and 28.4% annual growth.

In addition to saying this, I would like to state that I have a personal bias. I have increased my investment in Nvidia throughout 2026. I'm still buying these shares today, but you should do your own research before making any investment decisions.

I put Nvidia at the top of this list because in my opinion, it is the least risky and the surest bet on AI infrastructure when it comes to AI trading when risk is adjusted.

Maybe Nvidia has an innovation where the next generation design will use less memory.