NYU's 'Dean of Valuation' says Nvidia is 'particularly overpriced' after its surge this year
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NYU’s Aswath Damodaran said Nvidia is overpriced, even when compared with the rest of the so-called Magnificent Seven companies. “They were amazing buys at some point in time,” Damodaran told CNBC’s “Closing Bell” on Tuesday. “And today’s prices, I mean, all of the stocks looked overpriced, but I think Nvidia stands out as particularly overpriced.” NVDA 1D mountain Nvidia Nvidia is one of the seven stocks that have continued to rise as a group in 2024 after leading the S & P 500 in 2023. Together, the seven stocks are up by about 9% for the year. But Nvidia, which leads the pack, looks especially expensive this year after surging more than 37%. Damodaran, who’s known as the “Dean of Valuation” because of his company analysis, said that’s a stretch given its current earnings potential and cash flow. He expects that investors have used the buzz around generative artificial intelligence to justify overly exuberant valuations. “I think the laziness with which people attach premiums to companies just because they see the word ‘AI’ — and you see that partially with Microsoft as well — is, I think, terrifying because at some point in time, reality is going to play out and it’s not going to match those expectations,” Damodaran said. Instead, Damodaran favors Apple and Tesla in the Magnificent Seven group of companies, saying they are more attractive after their recent declines. Apple shares are down more than 1% in 2024, while Tesla has tumbled 25%. Earlier Tuesday, Strategas technical analyst Chris Verrone noted that Nvidia is NVDA approaching a 60% premium to its 200-day moving stock price, although he added that “historically, this has run even more extreme.” — CNBC’s Michael Bloom contributed reporting.
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