Nvidia's record buyback shows chipmaker's stock is too cheap for CEO Huang to resist — SkimNews
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Nvidia authorized an additional $150 billion in share buybacks on Monday, on top of an $80 billion repurchase plan announced in May, a move analysts called a 'clear-cut message' that management views the stock as undervalued.
- Nvidia's fiscal 2028 price-to-earnings ratio sits at 14.5 — below every megacap peer except Micron and roughly a quarter of its five-year average of 62.9 — even as the stock is up 23% year-to-date.
- Wall Street analysts on average expect Nvidia to hit net income close to $385 billion in fiscal 2028, up 60% from the prior year and more than fivefold over three years, driven by GPU demand from AI.
- Jensen Huang told investors at a Goldman Sachs conference earlier this month that Nvidia is 'the world's first and only growth value stock,' arguing it deserves a higher multiple for both its growth rate and its future earnings power.
- Nvidia told investors in August it sees 70% sales growth in fiscal 2028, implying hundreds of billions more in revenue than Wall Street had previously forecast.
- UBS analysts estimated the stepped-up repurchases could add 8 cents per share to calendar year 2027 earnings, which the bank estimates at $17.16.
- Nvidia also unveiled new software and hardware solutions to control AI agents on Monday, the same day the buyback was announced.
Why it matters: Nvidia's fiscal 2028 P/E of 14.5 — versus Apple's 35.5, Alphabet's 22.6, and Microsoft's 21.7 — prices the AI chip leader at a discount despite projected 70% sales growth and $385 billion expected net income. The $150 billion buyback signals management's view that the valuation gap is unsustainable, potentially forcing a re-rating.
Ask SkimNews
