NVDA Stock Overvalued At $140?

Core Viewpoint - Nvidia's recent fiscal Q1 performance shows strong growth, but future growth sustainability is questioned due to market dynamics and valuation concerns [2][5][8] Financial Performance - Nvidia reported adjusted earnings of $0.96 per share on revenues of $44.1 billion for Q1, reflecting a 69% year-over-year increase in sales and a 57% growth in earnings [2] - The company's Q2 sales outlook of $45 billion missed Wall Street's estimates of around $46 billion, primarily due to an expected $8 billion impact from export restrictions on H20 chips to China [2] - Nvidia spent $14.1 billion on share repurchases and paid $244 million in dividends during the quarter [2] Segment Performance - Data center revenue reached $39.1 billion, marking a 73% year-over-year increase, while Gaming & AI PC revenue grew by 42%, Professional Visualization sales increased by 19%, and Automotive & Robotics revenue rose by 72% [3] - The growth was driven by strong demand for Nvidia's GPU chips, particularly in generative AI applications [3] Product Development - Nvidia has ramped up production of its Blackwell AI supercomputers, which have contributed significantly to revenue growth [4] - The Blackwell cloud is now available on major platforms including AWS, Google Cloud, Microsoft Azure, and Oracle Cloud Infrastructure, with Microsoft being a substantial buyer [4] Margin Analysis - Nvidia's gross margins were reported at 61%, down 1,790 basis points from 78.9% in the previous year, but would have been 71.3% excluding one-time charges from H20 sales restrictions [4] Growth Sustainability Concerns - Nvidia's revenue growth has exceeded 80% annually for the last three years, but there are concerns that this growth may decelerate to 60% or even 40% [6][8] - Major customers like Microsoft, Google, Meta, and Amazon may not sustain their spending on Nvidia chips at the same growth rate, given their own revenue growth is around 15% annually [7] Valuation Outlook - Current valuation of Nvidia is estimated at around $100 per share, indicating a potential downside of over 25% from current levels [8] - Future growth may stabilize at a more sustainable pace of 20-30%, which, while lower than previous rates, is still considered respectable [9]