Nvidia’s (NVDA) valuation is too tempting for CEO Jensen Huang to ignore any longer.
The AI chip king unveiled a stunning new $150 billion stock buyback plan on Monday – the largest stock buyback authorization increase in history. This brings the company’s total repurchase authorization to $235 billion.
“NVIDIA’s growth is driven by a once-in-a-generation platform shift toward AI and accelerated computing,” Huang said in a statement. “Our cash generation gives us the ability to invest in technologies that advance this transformation and return capital to shareholders. This authorization reflects our confidence in the long-term opportunities that lie ahead.
Learn more: Nvidia launches AI security platform after Jensen Huang calls Anthropic and OpenAI ‘strange’
Huang probably sees the ideal time to buy back Nvidia shares at a low price, ahead of a 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, sparking a boom in the company’s stock price and earnings growth.
The decline has only accelerated this year despite a series of good quarters.
Nvidia’s forward P/E ratio currently stands at 24 times, not far off 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 the editor-in-chief of Yahoo Finance, host of the Sozzi unleashed morning show, the ‘Powerful actors with Brian Sozzi podcast and member of the Yahoo Finance editorial leadership team. Follow Sozzi on @BrianSozzi, InstagramAnd LinkedIn. Any advice on stories? Email brian.sozzi@yahoofinance.com.
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