NVDA

We rate NVIDIA CORP (NVDA) as a Hold with a composite score of 63.2/100 at a current price of $192.75. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in quality (83th percentile) and stability (61th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (21th percentile) and momentum (57th percentile) tempers our overall conviction. We assign a Wide Moat rating (73/100), Medium uncertainty, and Exemplary capital allocation.

Key items to watch: sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

NVIDIA CORP holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 63.2/100 places it at rank #408 in our full 7,333-stock universe. As a mega-cap company with a $4.5T market capitalization, NVIDIA CORP benefits from significant scale, distribution networks, and brand recognition that smaller competitors cannot easily replicate.

Revenue is growing at 90%, though momentum at the 57th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 70% (+27.4pp vs sector) narrow to operating margins of 59% (+57.8pp vs sector) and net margins of 52.8%, yielding a gross-to-net conversion rate of 75%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $192.75, NVIDIA CORP is trading near fair value based on current fundamentals. Our value factor score of 61/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 42.3x (a 90% premium to the sector median of 22.3x), EV/EBITDA of 37.1x (at a premium), P/B of 38.8x, P/S of 22.5x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Medium uncertainty rating to NVIDIA CORP. The stock presents a balanced risk profile: elevated market sensitivity (beta of 1.75) and elevated valuation multiple (P/E 42.3x) that leaves limited margin for error. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.75); elevated valuation multiple (P/E 42.3x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 61th percentile and quality factor at the 83th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 70% provide a buffer against cost pressures; conservative leverage (7% D/E) limits balance sheet risk; above-average stability (61th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate NVIDIA CORP's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 91.7%, disciplined leverage (7% D/E), best-in-class net margins of 52.8%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — NVIDIA CORP meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 0.02% dividend yield, and the combination of 67.7% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, NVIDIA CORP receives a Hold rating with a composite score of 63.2/100 (rank #408 of 7,333). Our quantitative framework assigns a Wide Moat (73/100, trend: stable), Medium uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 57/100.

Our analysis supports a neutral stance on NVIDIA CORP. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.