ValuAnalysis research: Nvidia, Amazon and Tesla not in tech bubble

Free net cash flow to assets increasing over time

Shares in the likes of Nvidia, Amazon and Tesla may "extravagantly priced" but there is a rationale behind their high market values, according to new research from London-based boutique ValuAnalysis.

The firm cited previous research on the relationship between growth and price, where the relationship flattens as growth gets higher. This suggests investors tend to discount high-growth companies compared to lower growth ones. The anti-fade model Most companies' valuations generally follow the fading return model, where it is assumed that all returns fade to the cost of capital. However, ValuAnalysis said that a growing number of disruptive companies are seeing an "anti-fade" - where the ratio of free cash flow to economic assets increases over time rather than falls. Digital...