Nvidia Stock Slumps 30% Below Fair Value Estimate: Morningstar

Nvidia's stock has been trading below its fair value estimate of $280, according to research firm Morningstar. The company's shares have dropped by around 30% from their estimated fair value.

Morningstar rates Nvidia a 'bargain' due to the recent recovery in AI-linked stocks and the company's strong earnings growth this year. However, the firm also notes that there are risks associated with customer concentration and geopolitical tensions, particularly U.S. export restrictions on China.

Nvidia has been assigned a 'Wide' economic moat rating by Morningstar due to its dominant position in the GPU market and its CUDA software platform. The firm expects tech companies to find alternative sources for Nvidia's GPUs or build their own solutions, but notes that this would not significantly reduce Nvidia's dominance.

The European Union is planning to invest €10 billion in seven AI gigafactories, which could provide another tailwind for Nvidia's stock. However, the company's shares are still on track to post a 5% loss for the week and a 2% dip in July.