Nvidia announced a huge new stock buyback plan on Monday. The AI chipmaker announced a $150 billion stock buyback authorization, giving the company permission to buy back that much of its own stock. The $150 billion authorization is the largest increase in a share repurchase authorization in history. The new plan is a major expansion of Nvidia’s existing buyback program.
Nvidia’s total stock buyback authorization now stands at $235 billion. The new $150 billion authorization adds to the company’s previous authorization, taking the total amount available for share repurchases to $235 billion.
Nvidia says AI is driving growth
CEO Jensen Huang said Nvidia’s growth is being driven by AI and accelerated computing. Huang said Nvidia is benefiting from a “once-in-a-generation platform shift to AI and accelerated computing.” Huang said this in a company statement.
Huang said Nvidia has enough cash to invest in new technology and return money to shareholders. He said the company’s strong cash generation allows Nvidia to invest in technologies that can advance the AI transformation while also returning capital to shareholders. Huang said this in the statement.
The buyback also shows Nvidia’s confidence in its long-term AI opportunity. Huang said the new authorization reflects the company’s confidence in the long-term opportunity ahead. Huang said this in the company statement.
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Nvidia stock valuation falls
Nvidia’s valuation has been falling even as its business continues to perform strongly. The company’s forward price-to-earnings, or P/E, multiple has steadily declined since August 2024, when AI started driving a major boom in Nvidia’s stock price and earnings growth, Yahoo Finance reported this trend.
That decline in Nvidia’s forward P/E has accelerated this year. This has happened despite the company reporting a series of strong quarters. Yahoo Finance reported that Nvidia’s forward P/E decline has accelerated this year. Nvidia currently has a forward P/E of about 24 times. This means investors are currently valuing Nvidia at around 24 times its expected earnings.
Nvidia P/E nears S&P 500
That is not far above the S&P 500’s valuation. The S&P 500 currently has a forward P/E of about 20 times, compared with Nvidia’s 24 times. The difference is notable because Nvidia remains one of the fastest-growing companies in corporate America. Its valuation has moved much closer to the broader market even though its growth remains strong.
This is the disconnect Huang appears to be seeing. Nvidia’s valuation has come down while the company continues to benefit from strong AI-driven growth.
Nvidia bets on more AI growth
The buyback could therefore be Nvidia taking advantage of its current valuation. Huang may see the company’s shares as attractive at current levels, particularly if AI development continues to accelerate. Yahoo Finance reported that Huang likely sees an opportunity to buy Nvidia shares ahead of further acceleration in AI development.
The main message from Nvidia is that AI growth remains central to its strategy. The company wants to continue investing in technologies supporting the AI shift while using its cash generation to return capital to shareholders. In simple terms, Nvidia is buying back shares because it has strong cash generation, expects the AI opportunity to remain large, and sees its current valuation as more attractive than it was during the earlier AI boom.