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When Aswath Damodaran talks about valuations, people listen. The NYU Stern finance professor has spent decades analyzing companies and earning his nickname as the "Dean of Valuation." So when he calls out specific stocks as irrationally priced, it's worth paying attention.
In a recent appearance on the Prof G Markets podcast on Nov. 14, Damodaran didn't mince words about two of the market's biggest darlings: Nvidia Corp. (NVDA) and Tesla Inc. (TSLA).
Damodaran expressed serious skepticism about Nvidia, the AI chip giant whose market cap has soared past $5 trillion in 2025. According to him, the numbers simply "does not hold up to scrutiny."
"You're looking at the greatest company ever, delivering 80% gross margins in perpetuity on revenues that are going to be a trillion dollars or more," Damodaran explained, breaking down what investors are essentially betting on. "None of those things hold up to any kind of scrutiny."
Think about what that implies. To justify its current price, Nvidia would need to maintain extraordinarily high profit margins forever while generating revenue at scales few companies ever achieve. It's not that Nvidia isn't a great company, it's that the expectations baked into the stock price border on fantasy.
Damodaran placed Tesla in the same "irrational" category as Nvidia, though for entirely different reasons. While Nvidia's issue is mathematical overreach, Tesla's problem runs deeper.
"I'm not even sure what Tesla is as a company anymore," he admitted. "I can't tell you what the story is because I'm not sure Tesla knows what the story is going forward."
It's a fair point. Is Tesla an electric vehicle manufacturer? An AI company? A robotics firm? An energy business? When a company's identity becomes this muddled, valuing it becomes nearly impossible. How do you build a coherent financial model when the underlying business narrative keeps shifting?
Damodaran's concerns extend well beyond just two stocks. He issued a broader warning about the Magnificent 10 tech stocks, which now represent roughly 40% of the S&P 500's entire market capitalization.
His prediction? There's "no place to hide" if these giants correct. Any significant downturn in these market leaders would ripple through the broader market, hitting index funds and passive investors especially hard. When such a concentrated group dominates the market, diversification offers less protection than many investors realize.
Despite his grim assessment of the tech sector overall, Damodaran did identify some relative bright spots. He called Alphabet Inc. (GOOG) (GOOGL) and Amazon.com Inc. (AMZN) the "least overvalued" among the big tech cohort.
The reasoning? Companies like Amazon have clearer paths to monetizing operational efficiency without depending entirely on the "AI boom" narrative that's driving so much speculation elsewhere in the sector.
But even calling these stocks the "least overvalued" isn't exactly a ringing endorsement. As Damodaran put it: "It'd be difficult to find one that's undervalued. There's nothing cheap."
Perhaps most telling is what Damodaran is doing with his own money. For the first time in his career, he's moving portions of his portfolio into cash and even considering collectibles.
That's a remarkable admission from a lifelong value investor. These aren't the moves someone makes when they see attractive opportunities in the market. They're defensive maneuvers, the kind you make when everything looks expensive and you'd rather sit on the sidelines than overpay.
As of Tuesday's premarket trading, TSLA was down 0.38% after closing 1.13% higher at $408.92 on Monday. The stock was up 7.81% year-to-date and 20.72% over the past year.
According to market data, Tesla maintains a stronger price trend over the medium and long terms with a weak short-term trend, though it carries a poor value ranking.
NVDA closed 1.88% lower at $186.60 on Monday and declined another 0.94% in premarket trading Tuesday. The stock was up 34.91% year-to-date and 33.14% over the past year.
Like Tesla, Nvidia maintained stronger price trends over the medium and long terms with a weak short-term trend, also carrying a poor value ranking.
The futures for the S&P 500, Nasdaq 100, and Dow Jones Indices were all trading lower on Tuesday, following Monday's sharp decline.
Damodaran's warnings raise an uncomfortable question for investors: If one of the world's most respected valuation experts can't find compelling value in the market's biggest winners, what does that say about where we are in the cycle?
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