NVIDIA: A Low Multiple Relative to Growth, Greater Trust Risk
Analysis date
Published
MW GOBLIN · AI company research
Neutral as of 2026-11-12. The Rubin ramp-up supports earnings growth, but memory costs, customer financing support, and uncertainty over the CEO's future have converged. A forward P/E of 17.5 x cannot readily be taken as evidence of undervaluation.
Toss Securities
Quote November 12, 2026 at 11:25 KST
Retrieved November 12, 2026 at 11:25 KST
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Margins Decline Even as Rubin Drives Revenue Growth
The product transition drives growth, but protecting margins is crucial. FY2027 Q2 data center revenue was 89023000000 USD, up 117% year over year. The company expects revenue growth of approximately 70% in FY2028 as Rubin ramps up. However, rising memory prices are expected to lower the gross margin from 75% in Q2 to 71–72% in Q4. Shipment growth must outweigh rising costs for EPS growth to continue. [1][2]
Strong Cash Generation Accompanied by a Greater Customer Support Burden
Cash generation is strong, but it cannot all be viewed as capacity for shareholder returns. FY2027 H1 FCF was 69895000000 USD, calculated by subtracting 4526000000 USD in asset purchases and related principal payments from 74421000000 USD in operating cash flow. The receivables collection period in Q2 increased to 60 day from 45 day in the preceding quarter. The PORTS guarantee entered into in August has a cap of 105000000000 USD and could become a long-term cash burden if conditions such as tenant default are met. [1][2][6]
The Independent Investigation and the CEO's Future Warrant a Valuation Discount
Management uncertainty can raise the required rate of return independently of demand. The board announced the appointment of an external independent investigator on November 10 day. Reuters reported on November 11 day, local time, that the board was discussing whether to dismiss the CEO, but the company's final decision has not been confirmed. The assessment is that a leadership vacuum could also affect Rubin shipments and cash collection if it delays discussions with customers and suppliers or the execution of investments. [4][5]
17.5 x Assumes Consensus Estimates Are Achieved
Dividing the retrieved share price of 162.92 USD by FY2027 adjusted EPS of 9.32 USD, compiled as of November 12 day, yields a P/E of 17.5 x. Diluted weighted-average shares in Q2 were 24285000000 shares, and cash and bonds of 56586000000 USD and borrowings of 33366000000 USD at the end of July were not used to calculate current EV. No price target is provided because the extent to which estimates reflect margin declines and risks surrounding the CEO's future, as well as the basis for the comparison multiple, is unclear. [1][3]
What could change the thesis
- The assessment would be upgraded if the Rubin ramp-up and price increases sustain the FY2028 gross margin outlook of 72–73% and the collection period improves.
- Earnings estimates and the assessment would be lowered if a CEO replacement or export restrictions delay shipments, or if customer guarantees result in cash outflows.
Sources and Evidence
- NVIDIA FY2027 Q2 Form 10-Q ↗2026-08-26 · Income statement, balance sheet, and cash flows; Notes 9 and 10
- NVIDIA FY2027 Q2 earnings call ↗2026-08-26 · Outlook on pages 3–7; Q&A on pages 8–15
- S&P Global consensus · Stock Analysis ↗Updated 2026-11-12 · FY2027 estimates table and EPS adjustment methodology
- NVIDIA independent directors' announcement of investigator appointment ↗2026-11-10 · Appointment of an independent investigator
- Reuters · Korea JoongAng Daily reporting on the CEO's future ↗2026-11-12 · Board discussion of the CEO's future and lack of a company response
- NVIDIA FY2027 Q2 CFO commentary ↗2026-08-26 · Balance Sheet and Cash Flow · FCF reconciliation
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