Nvidia (NVDA) is recording some of the fastest growth in its history, yet investors are assigning each dollar of expected earnings an exceptionally lower valuation than the early days of the AI boom.
That valuation disconnect is landing as Nvidia pours an unprecedented amount of capital into share buybacks.
On September 28, the chip giant boosted its share-repurchase authorization by $150 billion, bringing the total to $235 billion. Nvidia said it plans to take advantage of the authorization through fiscal 2028, referring to the $150 billion increase as the largest share-repurchase authorization boost ever.
The timing matters. Nvidia’s second-quarter revenue jumped 106% year over year to $96.2 billion, while Data Center revenue jumped 117% to $89 billion. Yet its shares traded at roughly 16.5 times 12-month forward earnings, the lowest multiple since January 2015, according to Reuters.
That leaves Nvidia investors in a unique conundrum. Nvidia’s underlying business is still growing at healthy rates, but Wall Street is paying decidedly less for its expected profitability.
Nvidia’s earnings are growing faster than its valuation
Nvidia’s latest financial results don’t give the impression that we are looking at a company that is going through a slow-growth phase.
For its fiscal second quarter ended July 26, Nvidia reported revenue of $96.2 billion, up 106% from a year earlier. Data Center revenue reached $89 billion, an increase of 117%, while GAAP operating income climbed 124% to $63.7 billion.
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Those figures make the contraction notable. Nvidia’s forward multiple of roughly 16.5 sits well below its 15-year average of about 30. That said, the multiple can change quickly as earnings and Nvidia’s stock price move. However, the dip in the stock price reflects how dramatically investor expectations have reset even while reported growth is on the higher side.
The stock itself also hasn’t had a major impact on semiconductor peers this year. Through Sept. 25, Nvidia was up a little more than 20% in 2026, roughly matching the Nasdaq 100, while AMD had more than doubled and Intel had more than tripled.
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Nvidia’s board is now setting aside a large sum of capital for buybacks amid the backdrop. The company added $80 billion to its authorization in May, then announced a further $150 billion in September. Nvidia had already given back around $26 billion to stockholders through buybacks and dividends during the second quarter.
This isn’t merely theory, either. Nvidia latest SEC filing shows it repurchased $19.7 billion of shares in Q2 and $39.8 billion during the first half of fiscal 2027.
Ultimately, the lower valuation is the real head scratcher. It can reflect several things, including a rising earnings estimate rather than simply a falling share price. In Nvidia’s case, the stock was in the black for 2026 when compared to a 16.5 multiple.
That creates an enigma for shareholders about whether AI demand remains robust today.
Investors now need to decide whether they are willing to pay for that growth if the enormous AI infrastructure spending cycle eventually stabilizes.
Nvidia has already been putting billions behind its shares
The new authorization is also more meaningful because Nvidia has shown, on multiple occasions, that it can put its cash war chest to good use.
In its latest quarterly filing, Nvidia said it bought back 94 million shares for $19.7 billion during the second quarter and 203 million shares for $39.8 billion during the first half of fiscal 2027. That compares with $24.2 billion of repurchases during the same six-month period in the year-ago period.
The company had $99.3 billion remaining under its authorization at the end of July before the latest $150 billion boost.
Nvidia also holds considerable financial power to finance capital returns.
It finished the July quarter with $22.44 billion in cash and cash equivalents and another $34.14 billion in marketable debt securities. When you take the two of those together, those assets total $56.59 billion.
More importantly, the business generated $74.42 billion in operating cash flow during the first six months of fiscal 2027, versus $42.78 billion in the year-ago period.
That cash generation allows Nvidia to allocate a large amount of capital on its business segments while giving back significant amounts to shareholders.
CEO Jensen Huang said the company’s cash generation gives it the capacity to invest in the technologies behind the AI transition while also returning capital.
The authorization itself, however, does not mean Nvidia is going to power through the $235 billion immediately. Its SEC filing says buybacks depend on market conditions, operating requirements, and other investment opportunities, and the company can suspend the program when it deems fit.
Nvidia’s next challenge is sustaining the earnings behind the multiple
The record buyback does not settle the issue of Nvidia’s valuation.
Instead, the debate stands sharpened as a result.
The company is producing far more revenue, profit and operating cash than it did when you look back at just a year ago.
At the same time, its forward earnings multiple is down to a level Nvidia has not seen since 2015.
Nvidia cannot ignore the competition as well. AMD has gained considerably more in 2026, while Intel has also blown past Nvidia through late September. At the same time, major technology companies continue to invest billions of dollars in AI infrastructure, while investors continue to discuss how long spending can continue at its current rate.
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That means the important number may ultimately be neither $150 billion nor $235 billion.
It may be 16.5.
If Nvidia keeps delivering strong earnings growth, a much lower forward multiple could make the company’s financial performance appear disconnected from its valuation. If AI spending growth weakens, however, the lower multiple might be for investors looking at a future in which the market will mature further.
Nvidia’s record buyback puts billions of dollars behind management’s confidence, an extraordinary bet on its track record. The company’s earnings will determine whether Wall Street’s growing caution is cause for concern.
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