Nvidia stock isn't as overvalued as you think

Nvidia  (NVDA)  just claimed the crown as the world’s most valuable company. Angelo Zino, senior vice president at CFRA Research joined TheStreet to break down why the AI giant's sky-high valuation is more than justified.

Related: Analyst resets Nvidia-backed AI stock price target after 200% surge

Full Video Transcript Below:

ANGELO ZINO: So as far as NVIDIA's valuation, do we think it's overvalued. So when are we entering the print for NVIDIA. The stock was trading at only about 24 times our calendar 26 estimate, and that was actually at the low end of their essentially 10 year historical range that we've looked at, especially when you look at it from a PE to growth ratio as well. This is the company trading towards the lower end of its range. Clearly, the growth rates are going to decelerate. They're not going to be anything like we've seen over the last two years. But what's really important is the free cash flow potential of this company is going to significantly improve.

 We expect the free cash flow run rate to exceed $100 billion exiting calendar 25, which would be second to only Apple right now. And they're probably going to surpass Apple at some point in time. So when you look at the free cash flow potential of this company, they're asset light business. And the fact that although growth rates are decelerating, they still remain pretty attractive in nature. The valuation we think is actually really compelling at these levels. And then the fact that you've now de-risked China to a large degree. And the belief that we think sovereign AI represents a massive opportunity for this company in the next couple of months and quarters, as we see greater news flow there, I think. Yeah, I mean, I think this is far from overvalued. In fact, I think it's an enticing valuation