Nvidia’s stock slump to 18 times forward earnings may trigger increased share repurchases under its $80 billion program.
Nvidia has shed nearly $1 trillion in market value since its May 14 peak, pushing its forward price-to-earnings ratio to 18, below the S&P 500’s 21. The decline marks its cheapest valuation since early 2019, before the AI-driven rally began.
The company recently expanded its capital return program, raising its dividend to $0.25 per share and authorizing an additional $80 billion in buybacks, supplementing a remaining $39 billion from prior plans. Analysts suggest management may accelerate repurchases to support the stock amid recent weakness.
Shares have fallen 16% from record highs as investors shifted toward memory chip stocks like Micron and Sandisk. Nvidia has pledged to return 50% of cash flow to shareholders this year, with potential for higher buybacks in future periods.