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Build a DCF Valuation Model: AI Prompt for Claude & ChatGPT

Copy this Claude prompt to build a DCF for stock research: drivers, WACC, terminal value, and sensitivity. Works with Claude, ChatGPT, Gemini, and Grok.

This DCF prompt for stock analysis walks through projections, WACC, and a sensitivity table. Use Claude, ChatGPT, Gemini, or Grok as a worksheet, then verify every input against statements and stated assumptions.

Recommended tools

ChatGPT

Claude

Gemini

Grok

The Build a DCF Valuation Model prompt (Claude, ChatGPT, Gemini, Grok)

Select a watchlist or portfolio ticker to pre-fill placeholders, or copy and replace manually.

You are a senior equity research analyst. Build a discounted cash flow (DCF) valuation for [COMPANY_NAME] (ticker: [TICKER]) over a [N_YEARS]-year explicit forecast horizon plus a terminal value.

## Context
Use historical financials from SEC filings as the starting point. Where assumptions are required (growth, margins, reinvestment), state each one explicitly with a brief justification. The output is a research artefact, not investment advice. Do not suggest whether to buy, sell, or hold.

## Required Analysis

### Part 1 - Historical Anchor
Build a 3-year historical table:
| Year | Revenue | EBIT | EBIT Margin | Tax Rate | NOPAT | D&A | CapEx | Working Capital Change | Free Cash Flow to Firm |

### Part 2 - Forecast Assumptions
State each assumption with a 1-line rationale grounded in filings, peer data, or sector norms:
- Annual revenue growth (years 1 through [N_YEARS])
- Operating margin trajectory
- Effective tax rate
- Reinvestment ratio (CapEx + change in WC) / EBIT
- Terminal growth rate (cap at long-run GDP unless justified)

### Part 3 - Forecast Period FCFF
Project Free Cash Flow to Firm for each year of the explicit forecast:
| Year | Revenue | EBIT | NOPAT | D&A | CapEx | Change in WC | FCFF |

### Part 4 - WACC Calculation
- Cost of equity via CAPM: Risk-free rate + Beta x Equity risk premium
- After-tax cost of debt
- Capital structure weights (market value if possible)
- WACC, with each input cited

### Part 5 - Terminal Value & Discounting
- Terminal value via Gordon growth: TV = FCFF(n+1) / (WACC - g)
- Optionally cross-check with an exit multiple (EV/EBITDA)
- Discount each forecast year FCFF and the terminal value to present value
- Sum to enterprise value, then bridge to equity value:
| Item | Amount |
| Enterprise Value | ... |
| Less: Net Debt | ... |
| Plus: Non-operating Assets | ... |
| Equity Value | ... |
| Diluted Shares Outstanding | ... |
| **Estimated Fair Value per Share** | ... |

### Part 6 - Sensitivity Table
2-way sensitivity for **Estimated Fair Value per Share**:
| | WACC -100bps | WACC base | WACC +100bps |
| g -50bps | ... | ... | ... |
| g base | ... | ... | ... |
| g +50bps | ... | ... | ... |

### Part 7 - Reverse DCF
Solve for the implied long-term revenue growth rate or terminal margin needed to justify the **current market price**. State whether market expectations look bullish, bearish, or neutral relative to the base-case forecast.

### Part 8 - Key Caveats & Research Agenda
- List the 3 assumptions the value is most sensitive to.
- List 3-5 follow-up research questions (e.g. "Is the assumed 4% terminal growth realistic given the addressable market?").

### Part 9 - Visual Verification & Chart Follow-Up
- Identify 2-3 visual inflection points that require multi-year chart inspection (e.g. historical FCF margin stability, 10-year reinvestment rates, and historical valuation multiple ranges).
- Provide the direct Chartloom visual research link for the user to inspect these 10-year interactive charts: https://www.chartloom.com/c/ticker/[TICKER]

## Output Format
Use clear tables, headers, and bullet points. Neutral, research-oriented language. Do not provide a price target or buy/sell recommendation.

**Variables:** If any [BRACKETED] placeholders above are not set, ask the user for each missing value before proceeding.

Variables

Replace these placeholders in the prompt with your own values.

Placeholder	Description	Example
[COMPANY_NAME]	Company name as it appears in filings.	NVIDIA Corporation
[TICKER]	Stock ticker symbol.	NVDA
[N_YEARS]	Length of the explicit forecast horizon (5-10 years recommended).	10

How to use this prompt

Replace all [BRACKETED] placeholders. For best accuracy, paste the income statement, cash flow statement, and balance sheet from the latest 10-K alongside the prompt. Treat the output as a structured first draft - all assumptions and inputs should be verified against primary sources before being used for any further work.

Tips

Always cross-check the WACC inputs - a 100bps WACC error often moves fair value 15-25%.
Use the reverse DCF as a sanity check: if the implied growth rate looks heroic, the market may already be priced for perfection.
For high-growth or unprofitable companies, a longer explicit forecast (10 years) is more defensible than a short window plus an aggressive terminal value.
Sensitivity tables matter more than the point estimate - they show how fragile the valuation is.
Pair this with the financial health and FCF prompts to validate the cash flow inputs.

When to use this prompt

Building a primary valuation section for a long-form research report

Stress-testing a thesis by varying WACC and terminal growth assumptions

Comparing implied market expectations to a fundamentally derived fair value

Onboarding to a new name by anchoring on cash flow drivers rather than headlines

Updated 2026-05-12

These prompts are research tools, not financial advice. Outputs should be independently verified. They are not a recommendation to buy, sell, or hold any security. See our disclaimer for more information.

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