TLDR
- UBS says Nvidia looks undervalued using its HOLT valuation framework, with an 86% forecast cash flow return on investment
- NVDA stock opened at $213.90 Thursday and has been range-bound for three months, up only 1.5% in that period
- Quarterly revenue jumped 105.9% year over year to $96.22 billion, beating estimates of $92.27 billion
- Insiders sold 1.7 million shares worth roughly $385 million over the past 90 days
- Analysts hold a “Buy” consensus with an average price target of $324.34; Nvidia has an $80 billion buyback program in place
Nvidia (NVDA) stock opened at $213.90 on Thursday, sitting just below its 12-month high of $236.54. The stock has been largely flat for three months, gaining just 1.5% despite posting one of the strongest earnings reports in its history.
UBS analysts say the market may be underpricing the stock. Using the bank’s HOLT framework, a corporate performance and valuation tool, Nvidia is forecast to hit an 86% cash flow return on investment. Only 30 companies globally are at that level right now.
UBS analyst Helen Booth noted that current valuations imply Nvidia’s margins will contract by around 800 basis points and revenue growth will slow to roughly 3% annually by 2029-30. She argues that picture looks too pessimistic given the data.
Nvidia reported earnings on August 26. The company posted $2.22 earnings per share, beating the $2.09 analyst consensus. Revenue came in at $96.22 billion, ahead of the $92.27 billion estimate and up 105.9% from the same period last year.
The company has a net margin of 63.66% and a return on equity of 96.04%. Analysts expect full-year EPS of $9.12.
Insider Selling Raises Eyebrows
Despite the bullish analyst outlook, insider selling has been heavy. Over the past 90 days, insiders sold 1.7 million shares worth about $385 million.
Director Mark Stevens sold 622,239 shares on September 4 at an average price of $231.62, a transaction worth roughly $144 million. That sale reduced his position by 21%. EVP Timothy Teter sold 30,000 shares on August 31 at $217.88, totaling $6.5 million. Teter’s sale was executed under a pre-arranged Rule 10b5-1 plan.
Institutional investors own 65.27% of the company. Mizuho Markets Americas trimmed its stake by 13.9% in Q2, selling 39,641 shares and retaining a position worth around $48.9 million.
Demand Stays Strong, Competition Grows
On the demand side, CoreWeave brought a multi-rack Nvidia Vera Rubin NVL72 cluster online, reinforcing expectations for continued GPU demand beyond Blackwell systems. Cloud company Nebius Group also announced it is raising rental prices across its range of Nvidia hardware, including older chips.
CEO Jensen Huang said the AI spending “flywheel” is accelerating. Meta’s Mark Zuckerberg backed that view, reducing fears around a development pause tied to safety regulation.
Competition is picking up. China’s Huawei said Thursday it plans to introduce new AI chips over the next two years, targeting the market left open by Nvidia’s export restrictions. OpenAI’s CFO also said the company now has more alternatives to Nvidia than before.
Nvidia has an $80 billion share buyback program authorized by its board. The company pays a quarterly dividend of $0.25 per share, with the next payment due October 1. The stock has a 50-day moving average of $214.10 and a two-hundred day moving average of $203.86.
The average analyst price target sits at $324.34, with ratings from 50 Buy, 3 Strong Buy, and 2 Hold.
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