TLDR
- Nvidia stock traded near $231 in Tuesday premarket action, close to its record high of $236.54.
- The company announced a $150 billion stock buyback plan on Monday, the largest in history.
- Nvidia’s fiscal 2028 price-to-earnings ratio sits at 14.5, its cheapest level in about a decade.
- CEO Jensen Huang called Nvidia a “growth value stock” and has pushed for more buybacks.
- Micron reports earnings Wednesday, a report that could shift sentiment across the AI chip trade.
Nvidia stock jumped almost 2% on Monday and added another 1% in Tuesday’s premarket session. That put shares on track to open near $231, within reach of the company’s record high of $236.54.
The move came after Nvidia unveiled a $150 billion stock buyback plan on Monday. It is the largest repurchase program ever announced by a company.
The new buyback sits on top of an $80 billion plan from May. At that time, Nvidia also raised its quarterly dividend to 25 cents per share from 1 cent.
Technical indicators are lining up in the stock’s favor too. Nvidia’s 10-day moving average has now crossed above its 20-day average, and both sit well above the 50-day and 200-day levels.
That pattern usually signals strong upward momentum. It can also draw in momentum traders, who buy into the strength and push the price higher still.
A Cheap Stock By One Measure
Despite the run higher, Nvidia’s valuation looks low by historical standards. Its price-to-earnings ratio for fiscal 2028 is 14.5, well below its five-year average of 62.9.
Analysts expect Nvidia’s net income to reach close to $385 billion in fiscal 2028. That would mark a 60% jump from the prior year and more than five times its level from three years ago.
Jensen Huang addressed the disconnect earlier this month at a Goldman Sachs conference. He said the company is “misunderstood” and described it as a “growth value stock,” meaning it deserves credit for both.
Huang has also been vocal about buying back Nvidia stock himself, telling CNBC’s Jim Cramer last month it was a “tremendous opportunity.”
How Nvidia Stacks Up
Nvidia’s fiscal 2028 P/E ratio trails Apple at 35.5, Alphabet at 23, Microsoft at 22 and Amazon at 23. None of those companies are projecting anywhere near Nvidia’s expected 70% sales growth for the year.
Among chip rivals, Nvidia also trades cheaper than Broadcom at 18, AMD at 38 and Intel at 55. None of those competitors have a product that directly matches Nvidia’s GPUs at scale.
Melius Research analyst Ben Reitzes has a buy rating on the stock. He said the bigger buyback should help close the valuation gap over time.
UBS analysts wrote in a note Monday that the expanded repurchase plan could add 8 cents per share to Nvidia’s calendar year 2027 earnings, which the firm estimates at $17.16.
Micron reports earnings Wednesday, and the results could move sentiment across AI-linked chip stocks broadly. Nvidia’s share count could shrink by 4% if the company uses its full buyback authorization.
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