The valuation on Nvidia (NVDA) is too appetizing for CEO Jensen Huang to ignore any longer.
The king of AI chips revealed a stunning new $150 billion stock buyback plan on Monday — the largest share repurchase authorization increase in history. It brings the company’s total buyback authorization to $235 billion.
“NVIDIA’s growth is being driven by a once-in-a-generation platform shift to AI and accelerated computing,” Huang said in a statement. “Our cash generation gives us the capacity to invest in the technologies that advance this transformation and return capital to shareholders. This authorization reflects our confidence in the long-term opportunity ahead.”
Read more: Nvidia launches AI safety platform after Jensen Huang calls Anthropic, OpenAI warnings ‘odd’
Huang likely sees a great moment to buy back Nvidia shares on the cheap, ahead of further acceleration in AI development.
Nvidia’s forward price-to-earnings (P/E) multiple has declined steadily since August 2024, when artificial intelligence began to take hold, unleashing a boom in the company’s stock price and earnings growth.
The decline has only accelerated this year despite a series of strong quarters.
The forward P/E ratio for Nvidia currently stands at 24 times, not too far removed from the S&P 500’s (^GSPC) 20-times multiple, despite the company being one of the fastest-growing companies in corporate America.
Huang sees the disconnect.
Brian Sozzi is Yahoo Finance’s Executive Editor, host of the Sozzi Unleashed morning show, the ‘Power Players With Brian Sozzi’ podcast and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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