Risk Analysis: Is NVIDIA Corporation a Value Trap or Safe to Buy?
NMS · Technology · Semiconductors
Is NVIDIA Corporation a safe investment right now?
NVIDIA Corporation's Altman Z-Score of 93.8 places it in the safe zone. Our DCF model estimates intrinsic value at $178.80, suggesting the stock is overvalued by 13%. Moat rating: 3.3/5 stars.
Could NVIDIA Corporation go bankrupt? Altman Z-Score analysis
Z-Score of 93.8 is above 3.0, indicating the company is financially healthy by this metric.
- Below 1.8 — Distress Zone (high bankruptcy risk)
- 1.8 to 3.0 — Gray Zone (elevated uncertainty)
- Above 3.0 — Safe Zone (financially healthy)
What drives NVDA's Z-Score?
| Component | Formula | Value | Weight | Contribution |
|---|---|---|---|---|
| A · Working Capital / Total Assets | WC / TA | 0.5563 | 1.2 | 0.67 |
| B · Retained Earnings / Total Assets | RE / TA | 0.6097 | 1.4 | 0.85 |
| C · EBIT / Total Assets | EBIT / TA | 0.2954 | 3.3 | 0.97 |
| D · Market Cap / Total Liabilities | MCap / TL | 152.1679 | 0.6 | 91.3 |
| E · Revenue / Total Assets | Rev / TA | 0 | 1.0 | 0.0 |
How has NVDA's financial health changed over time?
| Year | Z-Score | Zone |
|---|---|---|
| 2017 | 1048.9 | Safe |
| 2018 | 729.87 | Safe |
| 2019 | 784.74 | Safe |
| 2020 | 749.67 | Safe |
| 2021 | 579.97 | Safe |
| 2022 | 249.79 | Safe |
| 2023 | 169.18 | Safe |
| 2024 | 156.06 | Safe |
| 2025 | 130.99 | Safe |
| 2026 | 93.8 | Safe |
Source: Calculated from NVDA's latest 10-K filing on SEC EDGAR.
What is NVIDIA Corporation actually worth?
What assumptions go into this valuation?
| Parameter | Value | Source |
|---|---|---|
| FCF Growth Rate (Stage 1) | 20.0% | 70% analyst consensus + 30% historical |
| Analyst EPS Growth (This Year) | 74.8% | Consensus (56 analysts) |
| Analyst EPS Growth (Next Year) | 34.8% | Consensus |
| Historical 5Y FCF CAGR | 0% | SEC EDGAR |
| Terminal Growth Rate | 2.5% | Long-term GDP proxy |
| Discount Rate (WACC) | 14.0% | CAPM (Rf=4.3% + 2.33*5.5%) |
| Net Cash / (Debt) | $51,144M | Balance sheet |
| Base FCF (TTM) | $58.1B | Trailing 12 months |
| Shares Outstanding | 24,300,000,000 | Latest |
How sensitive is the valuation to growth rate changes?
| Growth Rate | 8% WACC | 10% WACC | 14.0% WACC | 13% WACC |
|---|---|---|---|---|
| 0% | $38.51 | $28.46 | $18.81 | $20.53 |
| 2.5% | $44.58 | $32.69 | $21.32 | $23.35 |
| 5.0% | $51.55 | $37.53 | $24.18 | $26.55 |
| 7.5% | $61.05 | $44.03 | $27.89 | $30.76 |
What does NVDA's free cash flow history look like?
| Year | FCF | Growth |
|---|
Source: FCF data from SEC EDGAR filings. Price via Yahoo Finance.
Does NVIDIA Corporation have a durable competitive advantage?
Moat rating: 3.3/5.
What makes up NVDA's moat score?
ROIC Stability
ROIC variability over the past decade. Score: 3/5.
Gross Margin Trend
Gross margin trajectory over the past decade. Score: 3/5.
Switching Costs
Estimated customer lock-in based on margin level. Score: 4/5.
How stable is NVDA's return on invested capital?
| Year | ROIC | Trend |
|---|---|---|
| 2017 | 15.1% | — |
| 2018 | 9.3% | Declining |
| 2019 | 19.2% | Rising |
| 2020 | 26.8% | Rising |
| 2021 | 24.5% | Declining |
| 2022 | 11.5% | Declining |
| 2023 | 11.4% | Stable |
| 2024 | 29.0% | Rising |
| 2025 | 7.7% | Declining |
| 2026 | 35.2% | Rising |
Source: ROIC calculated from SEC EDGAR filings.
Is NVIDIA Corporation's dividend safe?
Can NVIDIA Corporation afford its dividend?
Payout ratio is 0.8%. FCF covers the dividend 0.0x. 15 consecutive years of payments.
NVIDIA Corporation's key financial metrics
| Metric | Latest | 1Y Ago | 3Y Ago | Trend |
|---|---|---|---|---|
| Revenue | $10.9B | $11.7B | $6.9B | Rising |
| Net Income | $29.8B | $4.4B | $4.3B | Rising |
| Gross Margin | 62.0% | 61.2% | 58.8% | Rising |
Common questions about NVIDIA Corporation
Is NVIDIA Corporation at risk of going bankrupt?
NVIDIA Corporation's Altman Z-Score of 93.8 places it in the safe zone. This metric uses balance sheet ratios to predict bankruptcy probability within 2 years. A score below 1.8 signals distress, while above 3.0 indicates safety.
What is NVIDIA Corporation's intrinsic value based on DCF?
Our DCF model estimates NVIDIA Corporation's intrinsic value at $178.80 per share. The current margin of safety is -13.0%. This estimate is based on historical free cash flow trends and a risk-adjusted discount rate.
Does NVIDIA Corporation have a competitive moat?
NVIDIA Corporation receives a moat rating of 3.3 out of 5 stars, based on ROIC stability, gross margin trends, and estimated switching costs. A rating above 3.5 suggests a durable competitive advantage.
Is NVIDIA Corporation's dividend safe?
Our dividend safety analysis examines payout ratio, free cash flow coverage, and the company's streak of consecutive dividend payments to determine whether the current payout is sustainable.
Important disclaimer
This is not financial advice. All data is sourced from SEC EDGAR public filings. Always consult a qualified financial advisor before making investment decisions.
Last updated: Apr 20, 2026. Data may not reflect the most recent quarter if SEC filings have not yet been processed.
NVDA analysis methodology: How we calculate fair value, Z-Scores, and moat ratings