Embedded Files
Project Overview
Project Overview
NVIDIA is a leading technology company best known for designing processing units (GPUs) and advanced computing platforms. It has evolved into a critical infrastructure provider for artificial intelligence (AI), data centers.
Majority of the technology firms and cloud providers increased capital expenditure to build AI infrastructure, events that positioned NVIDIA as the primary beneficiary of the global AI investment cycle. This unprecedented demand translated into exceptional revenue growth and rising investor expectations which pushed NVIDIA's valuation metrics to historically high levels.
This research examines whether NVIDIA's market boom is supported by financial fundamentals or driven primarily by market sentiment and technical momentum. This project analyzes NVIDIA using both fundamental and technical analysis to evaluate its financial performance, valuation and stock price trends using python.
FUNDAMENTAL ANALYSIS
Operating Margins & Return on Capital Employed
Operating Margins & Return on Capital Employed
ROCE improves dramatically from 16.1% in 2023 to 59.8% in 2024 then 87.1% in 2025, indicating that the company uses investor funds efficiently to generate profits, a reason for high investor optimism. Dramatic growth of Operating profit margin from 20.7% in 2023 to 54.1% in 2024 then 62.4% in 2025 indicates exceptional operational efficiency by the management in generating more profit from each dollar of revenue.
Valuation
Valuation
NVIDIA's Earning per share shows a strong growth from 2023 to 2025 with a sharp rise from 0.18 in 2023 to 1.21 in 2024 the to 2.97 in 2025. There is a clear improvement in the amount that the company earns for every share. The DPS ratio is low and rarely growing indicating that NVIDIA prioritizes reinvestment and growth over dividend payouts. The P/E ratio indicates that investors were very optimistic about NVIDIA's growth in 2023 and willing to pay high prices for the company shares. The ratio drops significantly in 2024 and 2025, suggesting earnings growth was catching up with share price.
TECHNICAL ANALYSIS
NVIDIA's Price Movement
NVIDIA's Price Movement
NVIDIA's share price in 2023 stabilized and gradually recovered as investor optimism grew around the artificial intelligence growth began to build. There was a strong breakout in 2024 of the price due to exceptional financial performance and surging demand for AI and data center chips. In 2025, the price continued an upward trend but volatile reflecting sustained growth expectation alongside normal market corrections after its rapid share gains. NVIDIA's share price is likely to continue its upward growth but volatile due to continued demand for AI and data center chips.
NVIDIA's Daily Share Return
NVIDIA's Daily Share Return
NVIDIA's daily returns fluctuate around zero suggesting that NVIDIA does not gain or lose steadily day-to-day but many spikes both upward and downward indicate a significant rate of volatility.
Volatility Analysis Using CAPM
Volatility Analysis Using CAPM
The beta values (1.7736) shows that NVIDIA's stock is about 77.36% more volatile than the market. A positive value suggests that the NVIDIA's returns rise and fall with the market but at an amplified rate compared to the market.
Model Analysis
Model Analysis
62.3% of NVIDIA'S daily excess return movements are explained by the market movements. This shows a strong relationship between the market and NVIDIA's stock. The fitted line follows the general direction of the actual returns but fails to capture large spikes and crashes. In simple words, that indicates that about 37.7% of the changes in the stock are note explained by the normal market movements rather by firm-specific shocks.
62.3% of NVIDIA'S daily excess return movements are explained by the market movements. This shows a strong relationship between the market and NVIDIA's stock. The fitted line follows the general direction of the actual returns but fails to capture large spikes and crashes. In simple words, that indicates that about 37.7% of the changes in the stock are note explained by the normal market movements rather by firm-specific shocks.
Conclusion
Conclusion
Long-Term Investors
For long-term investors, NVIDIA represents a fundamentally strong growth company to invest. High ROCE signals efficient use of capital to generate profit reinforcing management confidence in capital allocation and reinvestment strategy. Long-term investors should view the short-term volatility as noise rather than risk.
Traders & Short-Term Investors
For traders, NVIDIA's pronounced spikes, high beta and large CAPM residuals indicate frequent trading opportunities but also significantly raises execution risk. Traders should expect sharp breakouts, rapid reversals and volatility around earnings releases, guidance updates and macroeconomic announcements.
Key Takeaway
The analysis confirms that NVIDIA's extraordinary market performance is strongly supported by financial fundamentals and not merely speculation. ROCE, operating margings and EPS demonstrated that the company is converting capital and revenue into profits. The rapid expansion in earnings has allowed valuation pressure to ease, as evidenced by the declining P/E ratio in 2024 and 2025, indicating that fundamentals are catching up with price rather than the stock becoming cheaper due to falling investor expectations.
However, the technical and risk analysis highlights that NVIDIA remains a high volatile stock with frequent sharp fluctuations. A beta of 1.77 confirms that NVIDIA amplifies overall market movements while CAPM results show that more than one-third of daily return variation is driven by firm-specific factors.
Page updated
Google Sites
Report abuse