At today's price, Nvidia's stock is pricing in roughly 28% annual free-cash-flow growth for the next ten years, at a 10% discount rate. Over the past five years, the company's actual FCF growth averaged 83% a year.
At its current price, NVDA implies ~28% annual FCF growth for the next 10 years, discounted at 10%.
Nvidia's actual 5-year FCF growth has averaged 83% a year.
Required growth vs. historical growth
Required growth from the reverse DCF below. Historical CAGRs calculated directly from 10-K FY2022, 10-K FY2025, and the Q4 FY2026 earnings release (Feb 25, 2026).
Sensitivity: what if the discount rate moves?
| WACC | Required annual growth |
|---|---|
| 8% | 22.7% |
| 10% (base case) | 28.2% |
| 12% | 32.9% |
Nvidia sits in an unusual spot: it's the largest company in the world by market cap (which argues for a lower, large-cap discount rate around 9%), yet it's also heavily exposed to semiconductor-cycle and regulatory risk (which argues for a higher, high-growth-stock rate around 12%). We ran the full 8–12% range because either characterization is defensible.
What would move this number
- Using only the most recent year's FCF (FY2026, $96.68B) instead of a 3-year average lowers the required growth rate to 21.8% at a 10% discount rate, since the starting base is simply larger.
- A more conservative 12% discount rate pushes the required rate up to 32.9% — still well under the 83% historical pace either way.
- Changing the terminal growth rate (2.5%) or the projection window (10 years) shifts the result slightly but doesn't overturn the core finding that the market's ask sits below Nvidia's recent track record.
Show your work
Five inputs, sources, model assumptions, and the calculation
- Share price$225.16 — stockanalysis.com, Aug 14, 2026 close
- Diluted shares outstanding24,391M — 10-Q Q1 FY2027, quarter ended Apr 26, 2026
- Free cash flow, last 3 fiscal yearsFY24 $27.02B · FY25 $60.85B · FY26 $96.68B
- Net debt$8.47B debt − $62.56B cash & securities = −$54.09B (net cash)
- Discount rate (WACC)10% base case (8% / 12% tested)
Why a 3-year average, not the latest year: FY2026 FCF of $96.68B sits 57.2% above the trailing 3-year average of $61.52B — beyond our ±40% normalization threshold. That spike partly reflects the one-time H20 inventory charge rolling off and data-center revenue compounding unusually fast; using it uncorrected risks overstating what's repeatable. So the base case uses the 3-year average instead.
Model: free cash flow is assumed to grow at a constant annual rate g for 10 years, then at a 2.5% terminal rate (roughly long-run GDP growth) thereafter. We solve by bisection for the value of g that makes the present value of those cash flows equal today's enterprise value.
| Component | Value |
|---|---|
| Market cap (price × diluted shares) | $5.49T |
| Net debt (negative = net cash) | −$54.09B |
| Target enterprise value | $5.44T |
EV = Σ(t=1..10) FCF₀×(1+g)ᵗ/(1+WACC)ᵗ + [FCF₀×(1+g)¹⁰×1.025/(WACC−0.025)]/(1+WACC)¹⁰, solved for g by bisection.
The fine print
- Change the discount rate, the projection window, the terminal growth rate, or how FCF is normalized, and the answer moves.
- A reverse DCF shows what the market currently expects — it does not say what the stock is "worth."
- Whether 28% annual growth is realistic depends on the business, not the math: data-center growth has already decelerated from +217% to +142% to +68%, and export-control policy has already cost real money once (the $4.5B H20 charge).
- Any investment decision, and its outcome, is your own responsibility.
Frequently asked questions
What growth rate does NVDA's stock price assume?
At today's price, Nvidia's stock is pricing in roughly 28% annual free-cash-flow growth for the next ten years, discounted at a 10% rate.
How does that compare to Nvidia's actual growth?
Over the past five years, Nvidia's actual free-cash-flow growth averaged about 83% a year — well above the ~28% the current price requires, meaning the price bakes in a sharp slowdown from the historical pace.
What share price was used for this analysis?
This analysis used $225.16, Nvidia’s closing price on Aug 14, 2026, as of Aug 17, 2026.