TLDR
- NVDA shares climbed to approximately $231 in premarket trading Tuesday, approaching the all-time peak of $236.54.
- Monday’s announcement of a $150 billion share repurchase program represents the biggest corporate buyback ever disclosed.
- The chip maker’s forward price-to-earnings multiple for fiscal 2028 has dropped to 14.5, marking a decade-long low.
- Jensen Huang, the company’s CEO, characterized Nvidia as a “growth value stock” while advocating for expanded buybacks.
- Wednesday’s Micron earnings release may influence broader market sentiment toward AI semiconductor stocks.
Shares of Nvidia climbed nearly 2% during Monday’s session and extended gains with an additional 1% rise in premarket activity Tuesday. The advance positioned the stock to open around $231, approaching striking distance of its all-time record at $236.54.
The rally followed Monday’s announcement that Nvidia would implement a $150 billion share repurchase initiative. This marks the most substantial buyback authorization any corporation has ever disclosed.
This fresh authorization supplements an existing $80 billion program launched in May. During that same period, the company elevated its quarterly dividend from a penny to 25 cents per share.
Chart patterns are also turning favorable for the semiconductor giant. The 10-day moving average has recently pushed above the 20-day line, with both indicators sitting comfortably above the 50-day and 200-day benchmarks.
This configuration typically indicates robust bullish momentum. Such setups often attract momentum-focused traders who pile into strength, creating additional upward pressure on the share price.
Valuation Metrics Suggest Bargain Territory
Despite the recent strength, Nvidia’s current valuation appears attractive when measured against its own history. The forward P/E multiple for fiscal 2028 stands at 14.5, significantly beneath the five-year average of 62.9.
Wall Street forecasts project Nvidia’s net earnings will approach $385 billion in fiscal 2028. This represents a 60% increase year-over-year and more than quintuples the figure from three fiscal years earlier.
Speaking at a Goldman Sachs conference this month, Jensen Huang tackled this valuation puzzle directly. He suggested the market has “misunderstood” the company, positioning it as a “growth value stock” that merits recognition on both dimensions.
The CEO has also expressed personal conviction in the stock’s upside, telling CNBC’s Jim Cramer last month that buying Nvidia shares represented a “tremendous opportunity.”
Competitive Valuation Analysis
Looking at fiscal 2028 P/E ratios, Nvidia’s 14.5 multiple sits well below Apple’s 35.5, while also undercutting Alphabet, Microsoft and Amazon, each trading around 22 to 23. Critically, none of these tech giants are forecasting growth rates that approach Nvidia’s projected 70% revenue expansion for the period.
Within the semiconductor space, Nvidia also appears discounted relative to Broadcom at 18, AMD at 38, and Intel at 55. Importantly, none of these chip competitors offer GPU solutions that match Nvidia’s capabilities and production volume.
Ben Reitzes from Melius Research maintains a buy recommendation on the shares. His analysis suggests the enhanced buyback program should gradually narrow the valuation discount over time.
Analysts at UBS indicated in Monday research that the enlarged repurchase plan might contribute 8 cents per share to Nvidia’s calendar 2027 earnings, which the firm projects at $17.16.
Wednesday brings Micron’s quarterly earnings report, an event that may shift investor sentiment across AI chip stocks more broadly. If Nvidia deploys its complete buyback authorization, the outstanding share count could decline by roughly 4%.
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