Nvidia Announces Massive Share Buybacks Amid Valuation Compression
Nvidia is executing multi-billion dollar share repurchases as its price-to-earnings multiple hits decade lows despite continued AI-driven growth.
The forward price-to-earnings multiple for Nvidia has compressed to a decade-low level of 19, as earnings estimates have grown faster than the company's share price. While the stock has gained 24% this year, it has trailed rival Advanced Micro Devices, which saw a 188% increase. This valuation dip is attributed to investor concerns over the sustainability of the AI boom, rising memory costs, and competition from custom silicon.
To counter these pressures and enhance per-share compound earnings growth, the company is executing a massive share buyback program. Initial reports noted a record $150 billion repurchase, while updated figures indicate a $235 billion program running through fiscal 2028. These buybacks triggered a brief rally and are seen by some analysts as a signal of a buying opportunity, given that the company's historical valuation floor sits between 17 and 20.
Despite the current compression, analysts maintain a Buy rating with a price target of $352, suggesting a potential 55% upside. This optimism is driven by Nvidia's full-stack architecture and platform dominance across NVLink, CPU, and cooling topologies. The company currently trades at 14.5x FY2028 earnings per share, with an expected 34% year-over-year growth for FY2029.
