NVDA DCF model — happy to walk through the assumptions if anyone's interested
**Approach:**
1. R&D capitalization, affecting NOPAT and invested capital
2. Adjusted ROIC, marginal ROIC, RR
3. Took a snapshot of the historical range of marginal ROIC and RR — the interplay between marginal ROIC and RR determines the organic growth rate, g\_internal
4. Extracted Wall Street consensus estimates for the upcoming 5-year Revenue CAGR and EPS CAGR
|—— R&D Capitalization (Geometric Decay) ——|
|:-|
|prior\_rnd\_asset (prior year-end balance; year 1 = 0)|
|amortization\_this\_year (= prior\_rnd\_asset × decay\_rate)|
|rnd\_asset\_value (= prior × (1 − decay\_rate) + rnd\_expense)|
|**—— NOPAT Waterfall ——**|
|NOPAT ((OI + rnd\_expense − amortization) x (1-tax))|
|**—— Invested Capital Waterfall ——**|
|invested\_capital (= after\_cash + rnd\_asset\_value)|
|**—— ROIC / Marginal ROIC (1y) / RR (1y) ——**|
|roic (= NOPAT / invested\_capital)|
|nopat\_margin (= NOPAT / revenue)|
|invested\_capital\_turnover (= revenue / invested\_capital)|
|marginal\_roic\_1y (= ΔNOPAT / ΔInvestedCapital; year 1 has no prior year, left blank)|
|rr\_1y (= ΔInvestedCapital / prior-year NOPAT)|
|g\_internal\_1y (= marginal\_roic\_1y × rr\_1y)|
|Statistic|Marginal ROIC(1y)|RR(1y, annualized)|
|:-|:-|:-|
|TOP (MAX)|236.1%|283.4%|
|BOTTOM (MIN)|\-637.0%|\-20.0%|
|MEDIAN|21.8%|68.9%|
|Analyst Consensus Growth Reference (5-year, informational only)||
|:-|:-|
|Revenue CAGR (FY2026→FY2031)|39.3%|
|EPS CAGR (FY2026→FY2031)|33.6%|
**Assumptions:**
1. Marginal ROIC: **50%**
2. RR: **70%**
3. WACC: **13.5%** (ERP taken from Professor Damodaran's database; beta calculated from the deviation of the current year's price change vs. the S\&P; debt and capital taken from the balance sheet)
4. Assuming 5 years of explicit high growth, fading gradually toward GDP growth over the following 5 years
5. Year 11 onward: the business turns stable, with ROIC = WACC
6. Starting Data
|Starting Data||
|:-|:-|
|Base fiscal year (base\_fy)|FY2026 + 1y Estimated Growth|
|Starting NOPAT|161,151.75|
|Starting invested\_capital|164,060.76|
**DCF table and price calculation:**
|period|component|growth|pv|
|:-|:-|:-|:-|
|1|explicit|35.0%|92,326.15|
|2|explicit|35.0%|109,858.79|
|3|explicit|35.0%|130,720.87|
|4|explicit|35.0%|155,544.63|
|5|explicit|35.0%|185,082.40|
|6|fade|26.6%|217,840.96|
|7|fade|19.3%|244,664.47|
|8|fade|13.2%|263,458.06|
|9|fade|8.1%|273,384.57|
|10|fade|4.2%|274,930.92|
|10|terminal\_value|4.2%|3,052,878.03|
||PV Total||5,000,689.85|
|Enterprise Value (= PV Total)|5,000,689.85|
|:-|:-|
|Less: Total Debt (= long\_term\_debt + short\_term\_debt, base fiscal year FY2026)|8,468.00|
|Less: Minority Interest / Preferred Stock (assumption, default 0, editable — see note above)|\-|
|Plus: Cash & Equivalents + Short-Term Investments + Long-Term Investments (same basis as the excess-cash exclusion in invested capital)|84,807.00|
|=@Equity Value|5,077,028.85|
|÷ Shares Outstanding (shares\_outstanding) (default = cover-page share count for FY2026 in Historical Waterfall; overwrite with a more accurate diluted count if available)|24,300,000,000|
|=@Implied Price per Share (Method B)|$208.93|
**Sensitivity test**
|WACC ＼ g|3.2%|4.2%|5.2%|
|:-|:-|:-|:-|
|11.5%|$260.44|$268.21|$276.31|
|12.5%|$229.33|$235.54|$242.01|
|13.5%|$203.68|$208.73|$213.97|
|14.5%|$182.26|$186.40|$190.71|
|15.5%|$164.16|$167.60|$171.17|
This is for study purposes only. Happy to walk through the formulas in the comments.