Dean of Valuation’s Views
Aswath Damodaran, known as the “Dean of Valuation,” a distinguished figure in financial circles and a faculty member at New York University, has raised apprehensions about the astronomically high price of Nvidia Corp (NVDA).
In a recent CNBC appearance, he characterized the valuation of Nvidia as “priced to the point of insanity,” emphasizing that its current valuation appears untenable.
Damodaran pointed out that while other stocks in the Magnificent Seven might be accessible at their current prices, Nvidia’s valuation defies reason and rationality. He expressed skepticism about the possibility of justifying the stock at its expense level, citing his inability to reconcile it with its earnings potential and cash flows.
On the other hand, Damodaran indicated a favorable outlook for Apple Inc (AAPL) and Tesla Inc (TSLA) within the group, asserting that these stocks currently present the most attractive valuations.
Despite his reservations about the entire group being somewhat overpriced, Damodaran suggested that investors seeking exposure to the Magnificent Seven stocks should consider Apple and Tesla as potential investment candidates.
Damodaran disclosed that he recently purchased Tesla shares around $180, expressing confidence in the stock’s potential despite its recent slump linked to concerns about electric vehicle adoption rates.
Regarding Apple, Damodaran highlighted the stock’s historical correlation with iPhone upgrade cycles and expressed optimism about its future prospects. He opined that at its current price, Apple presents a desirable investment opportunity, characterized by slow and steady growth and underappreciated potential.
As the valuation savant alluded to, Nvidia shares were up 2.77% at $701.12, while Tesla shares were up 1.80% at $188.44. Apple shares, on the other hand, showed a marginal decline at $189.19.