Key Takeaways
- Shares of Nvidia approached $231 during Tuesday’s premarket trading, nearing the all-time peak of $236.54.
- Monday’s announcement of a $150 billion share repurchase program represents the biggest buyback initiative in corporate history.
- The chipmaker’s fiscal 2028 P/E multiple stands at 14.5, marking the most attractive valuation in approximately ten years.
- Jensen Huang, the company’s CEO, characterized Nvidia as a “growth value stock” while advocating for expanded buyback programs.
- Wednesday’s Micron earnings release may influence investor sentiment throughout the artificial intelligence chip sector.
Shares of Nvidia climbed nearly 2% during Monday’s trading session and extended gains by an additional 1% in premarket activity on Tuesday. This momentum positioned the stock to commence trading around $231, approaching striking distance of the company’s all-time high of $236.54.
The rally followed Monday’s announcement that Nvidia would implement a $150 billion share repurchase initiative. This program establishes a new benchmark as the most substantial buyback ever disclosed by any corporation.
This fresh authorization supplements an existing $80 billion buyback plan introduced in May. During that same announcement, the company also increased its quarterly dividend from 1 cent to 25 cents per share.
Chart patterns are also working in favor of the stock’s upward trajectory. The 10-day moving average for Nvidia has recently moved above its 20-day counterpart, while both indicators remain comfortably elevated above the 50-day and 200-day moving averages.
This configuration typically indicates robust bullish momentum. Such setups often attract momentum-focused traders who pile into advancing stocks, potentially amplifying price appreciation further.
Attractive Valuation Despite Rally
Even with the recent appreciation, Nvidia’s current valuation appears modest when measured against historical benchmarks. The forward price-to-earnings ratio for fiscal 2028 registers at 14.5, significantly beneath the five-year average of 62.9.
Wall Street forecasts suggest Nvidia’s net earnings could approach $385 billion in fiscal 2028. Such results would represent a 60% increase year-over-year and exceed five-fold the earnings generated three years earlier.
During a Goldman Sachs conference earlier this month, Jensen Huang tackled this valuation anomaly. He suggested the market has “misunderstood” the company and positioned it as a “growth value stock,” arguing it merits recognition for both characteristics simultaneously.
The CEO has also publicly endorsed purchasing Nvidia shares, describing it as a “tremendous opportunity” during a discussion with CNBC’s Jim Cramer last month.
Comparative Valuation Analysis
When examining fiscal 2028 P/E multiples, Nvidia’s 14.5 ratio appears discounted compared to Apple’s 35.5, Alphabet’s 23, Microsoft’s 22, and Amazon’s 23. Notably, none of these technology giants are forecasting revenue expansion approaching Nvidia’s projected 70% growth rate for the period.
Within the semiconductor industry, Nvidia also trades at a discount relative to Broadcom’s 18 multiple, AMD’s 38, and Intel’s 55. None of these industry peers possess products capable of directly competing with Nvidia’s GPU offerings at comparable scale.
Ben Reitzes, an analyst at Melius Research, maintains a buy recommendation on the shares. He believes the enhanced buyback program should gradually narrow the valuation differential.
UBS analysts noted in Monday’s research that the enlarged repurchase initiative could contribute 8 cents per share to Nvidia’s calendar year 2027 earnings, which the firm projects at $17.16.
Wednesday brings Micron’s quarterly results, a report with potential to influence investor appetite for AI-focused semiconductor stocks more broadly. Should Nvidia deploy its complete buyback authorization, the outstanding share count could contract by approximately 4%.
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