Full Breakdown
Nvidia Expands $150 B Share Buyback as Valuation Hits Decade Low
By Drooid · · How we work
Core Event
Nvidia announced an additional $150 billion authorization for its share-repurchase program, adding to the $80 billion plan unveiled in May. The buyback was disclosed on a Monday, prompting the stock to rise roughly 2 % in trading. The move follows a period in which the company’s price-earnings (P/E) ratio for fiscal 2028 fell to 14.5, the lowest level in a decade and below all megacap peers except Micron.
Valuation and Growth Outlook
Analysts note that Nvidia’s five-year average P/E of 62.9 contrasts sharply with the current 14.5, indicating that earnings are projected to outpace share-price growth. The firm expects fiscal-2028 net income near $385 billion, a 60 % increase from the prior year, and has signaled 70 % sales growth for that fiscal year—far ahead of rivals such as Broadcom, AMD and Intel, whose forecasts are markedly lower. Compared with peers, Nvidia’s FY2028 P/E trails Apple (35.5), Alphabet (22.6), Microsoft (21.7) and Amazon (23.2).
Management Rationale
CEO Jensen Huang has repeatedly emphasized that Nvidia generates substantial cash and intends to return a large portion to shareholders. Huang also indicated that the firm will continue to fund new AI-focused hardware and software solutions while using excess cash for buybacks.
Analyst and Investor Reactions
“If you look at the P/E ratio, the earnings are scaling up faster than the share price,” — Karan Ramchandani, managing director at Post Oak Group, in an interview – Karan Ramchandani, managing director at Post Oak Group, called the buyback “a clear-cut message” that management believes the stock is undervalued and highlighted the rapid earnings scaling relative to the share price.
“As we generate more cash, we'd like to be able to return it back to shareholders.” — Gene Munster, managing partner at Deepwater Asset Management – Gene Munster, managing partner at Deepwater Asset Management, said the company’s cash generation will enable further shareholder returns.
“It's just really hard for investors to get comfortable that that's going to continue,” — Gene Munster, managing partner at Deepwater Asset Management – Munster added that investors remain uneasy about sustaining the recent growth trajectory.
UBS analysts estimated that the expanded repurchases could add 8 cents per share to calendar-2027 earnings, projected at $17.16.
Potential Impact on Shareholder Returns
If Nvidia utilizes the full authorization, the share count could shrink by about 4 %, enhancing earnings per share and potentially narrowing the valuation gap with peers. The buyback, combined with a projected dividend increase to 25 cents per share, underscores the company’s strategy of channeling its AI-driven cash flow into direct returns for investors.
