Nvidia on Monday unveiled a record-breaking $150 billion authorization for its share buyback program, a move CEO Jensen Huang described as a response to the company’s currently undervalued stock. The decision underscores management’s confidence in the chipmaker’s financial trajectory amid the global artificial intelligence expansion.
The authorization comes as Nvidia’s forward price-to-earnings ratio for fiscal 2028, beginning in February, stands at 14.5. This figure is notably low compared to its five-year average of 62.9 and sits below all megacap peers except Micron. Despite the stock rising 23% this year to lead the Nasdaq, analysts argue the share price has not kept pace with the company’s accelerated earnings growth.
Wall Street projections indicate Nvidia could achieve net income of approximately $385 billion in fiscal 2028, representing a 60% increase from the prior fiscal year and more than a fivefold jump over three years. Huang has publicly characterized Nvidia as a “growth value stock,” telling investors at a recent Goldman Sachs conference that the market has misunderstood the company’s dual nature.
This latest financial commitment adds to an $80 billion repurchase plan announced in May. At that time, the company also raised its quarterly cash dividend to 25 cents per share, up from 1 cent. If Nvidia fully utilizes its current buyback authorization, its outstanding share count could decrease by 4%.
Karan Ramchandani, managing director at Post Oak Group, described the buyback as a “clear-cut message” that leadership views its own shares as the best available investment. “The earnings are scaling up faster than the share price,” Ramchandani noted, highlighting the compressed multiples as a sign of health rather than distress.
The surge in capital return plans follows explosive revenue and cash flow growth driven by high demand for Nvidia’s graphics processing units, which are essential for building and running AI models. In August, the company guided for 70% sales growth in fiscal 2028, implying revenue figures significantly above previous Wall Street estimates.
However, some market observers remain cautious. Gene Munster of Deepwater Asset Management suggested that investors are concerned about the sustainability of growth rates after several years of monumental expansion. He attributed the compressed valuation to fears that the rapid growth curve may flatten.
Ben Reitzes, an analyst at Melius Research, maintained a buy rating, stating that the aggressive buybacks should help correct the valuation gap. UBS analysts estimated that the stepped-up repurchases could contribute an additional 8 cents per share to calendar year 2027 earnings, which they forecast at $17.16.
On the day of the announcement, Nvidia’s stock climbed nearly 2%. The company also revealed new software and hardware tools designed to manage AI agents, further cementing its role at the center of the AI infrastructure boom.
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