NVDA's $235B buyback capacity and attractive valuation (19x forward P/E) support a bullish long-term thesis based on cash generation and capital allocation confidence.

Nvidia has just made a very big move, and I'm not talking about another AI chip, I'm not talking about a deal with a huge cloud service provider, and I'm not talking about another data center announcement.

Nvidia has just announced an additional $150 billion share buyback program . But here's the part that I think is being overlooked.

Nvidia already had billions of dollars remaining under its existing buyback program . So, following today’s announcement, Nvidia is now authorized to repurchase up to $235 billion of its own shares through fiscal year 2028, and that could be huge for investors.

To put that in context, Reuters reported that this is the largest increase in the share buyback program ever, exceeding Apple's $110 billion mandate in 2024.

So, the question now for most investors is: Why now? Because it is ultimately one of the largest companies in the world. But even if this growth continues at a strong pace , which is something we've been discussing on this channel and within my investment community, which you can access using the link in the description below, the valuation versus the growth you're getting and the margins you're achieving is very attractive to investors.

Given all of this, the administration has just granted itself the ability to spend nearly a quarter of a trillion dollars to repurchase its own shares.

In today's video, I want to answer five key questions . Why $235 billion ? What is the impact of that? Can Nvidia actually afford that? What does this do for earnings per share?

Does this make Nvidia shares a buy option? Fifth, what trading options can we use on the stock to generate more cash flow?

So, what did Nvidia actually announce ? Okay, first of all, there is an important difference here. Nvidia did not say that we would buy $ 150 billion worth of shares today. This is a statement authorizing the repurchase of shares.

Nvidia's board of directors approved an additional $150 billion under its existing program, and after accounting for the remaining balance, the company now has $235 billion available for buybacks.

Nvidia says it expects to complete the remaining program through fiscal year 2028. This gives the company maximum flexibility. This does not mean that $235 billion will be spent tomorrow.

This means that Nvidia has essentially created a huge pool of capital that management can use to buy shares over the next two years.

What is particularly interesting is the fact that Nvidia is actually buying. Let's go back to just one quarter of a year. During Nvidia's second quarter, the company returned $26 billion to shareholders.

This included $20 billion in share buybacks and another $6 billion through dividends. This is not a company that suddenly discovers buybacks . In fiscal year 2026, Nvidia returned approximately $41.1 billion to shareholders through share buybacks and dividends.

Then in May of this year, the board approved another $80 billion for buybacks. And now, just 4 months later, they've added another $150 billion. This is exceptional.

And this is where the story becomes really interesting. Because usually, when we hear about a $235 billion buyback, the first question should be: " Where does this money come from?

" Is Nvidia taking on massive debt? Are they sacrificing investment in future growth? Are they trying to financially engineer earnings per share growth? But Nvidia is in a very unusual situation.

Businesses generate huge amounts of cash. Look at the growth over the past few years . Revenues reach $303 billion, with operating income approaching $200 billion . We are talking about revenue growth of more than 80% of the largest company in terms of market capitalization.

Let's move on to cash flow, and look here. The company achieved an operating cash flow of 134 billion in the past twelve months and a free cash flow of 127 billion, which is amazing.

At the start of the pandemic, Nvidia 's free cash flow was less than $5 billion. And here we are now at $127 billion . It's a machine for printing money.

This is the part that I think investors should appreciate. Nvidia has reached a point where it can spend heavily and simultaneously on research and development, Vera Rubin architecture, networks, software, AI infrastructure , strategic investments, and return billions of dollars to shareholders.

This is an incredibly unusual financial situation for any company.

Now , let's explain why Nvidia might want to buy back its own shares. Imagine a company that earns $100, and there are 100 shareholders, each owning one share. For them, earnings per share are one dollar.

Now, imagine that the company repurchases some of those shares from the open market. 10 of these shareholders say: "Hello, I am ready to sell my shares." Therefore , the company buys those shares, which practically means withdrawing them from trading.

The company continues to make exactly the same amount of profit , which is $100. But now there are only 90 shares outstanding, meaning earnings per share have increased from the original $1 to about $1.11.

The company did not grow in that scenario. Profits did not increase , but every remaining share now owned a larger stake in the company. This is the fundamental power of share buybacks.

But there is a drawback. Repurchasing is not automatically a good thing, and I think this is where investors sometimes go wrong. If a company were to repurchase shares at $50 when they are worth $100, it would create tremendous value for shareholders.

On the other hand, if a company buys shares at $100 and then their value drops to $50, this could destroy the value of the shareholders. So, the important question is not whether Nvidia is buying the shares, but what price is Nvidia paying?

This takes us directly to the evaluation. This is likely to be the biggest headline that will result from this announcement. People will say, "Jenssen thinks Nvidia is undervalued."

And he might be right. I don't think this would be a huge exaggeration, but I would be careful. A buyback authorization does not automatically mean that management believes the stock is significantly undervalued.

Companies repurchase their shares for a variety of reasons, such as returning excess capital, offsetting stock-based compensation, managing dilution, increasing earnings per share, improving capital structure, or simply because management believes that a share buyback is an attractive use of capital.

So, I can't say that Nvidia just told us its stock is cheap. In fact, I would say that Nvidia is showing that management is comfortable allocating an exceptional amount of capital to its own shares.

This is meaningful, but it's not exactly the same thing .

Now let's look at the valuation from different angles, starting with the forward price-to-earnings ratio . Looking at the screen now, you'll see that the forward price-to-earnings ratio is currently only 19 times.

The company's five-year average is 36 times. Therefore, the current valuation is approximately half the historical average. On top of that, add the expectation of earnings per share growth of around 70% for next year, and we are talking here about a company with a price-to-earnings-to-growth (PEG) ratio well below one.

Let's look at another angle, which is the market capitalization-to-earnings-before-interest-taxes-depreciation-and-amortization ( EV/EBITDA) ratio, which is trading at just 15.5 times, well below the company's five-year average of 34 times.

We are talking about a stock that is being traded as if it were a canned food company.

It is strange to see how much investors are ignoring Nvidia. But the timing of all this is really interesting. This is what I would like to talk about, because I think the timing is worth paying attention to.

Reuters reported this morning – and we just saw it – that Nvidia is trading near its lowest price-to-earnings ratio in more than a decade. Think about how strange that is. The stock has risen explosively over the past several years .

Nvidia has become one of the largest companies on Earth , yet profits have grown so rapidly that the valuation multiple has fallen significantly. And this profit story will continue into the future.

That's the story of Nvidia in one sentence . The stock price exploded, but the profits exploded even faster.

This is where I think people can make serious mistakes when analyzing this particular company. Imagine that a stock's price has doubled. Most investors immediately believe that the stock has become too expensive and that they have missed their opportunity.

But imagine that company's profits tripled. The stock may actually become cheaper in terms of earnings despite its price doubling. And that is exactly what we saw happen with Nvidia.

The stock price has risen significantly, but earnings estimates have been constantly chasing it upwards. That's why I don't like to look at a stock chart and say, "The stock has gone up too much."

" My opportunity has been lost." Instead, I ask: "What happened to the profits?" This is the common denominator.

Nvidia's division was experiencing tremendous growth. But like any arrow, you will find plenty of skeptics who do not have real answers , and are merely talkers . Watch this clip from a CNBC interview about the topic of "Nvidia" specifically.

Nvidia has just agreed to a $150 billion share buyback. And if that number seems huge, it really is . It is the largest share buyback program in the history of the US and possibly the global market, surpassing Apple's previous operations.

Does this solidify Nvidia's position as the king of all things artificial intelligence? Let's ask Jay Goldberg of " Seaport Securities". He has some stocks in the Nvidia market that he prefers.

But first, Jay, what do you think of the Nvidia news itself?

I think Nvidia launching this huge program is a good thing for them. It shows their concern for shareholders. Obviously, in absolute terms, it's a very large sum. But I'm not sure if this will calm people's concerns about the stock.

You know, Nvidia's stock has been fairly stable over the past year.

I would like to stop the video here quickly before we continue. This is the same analyst who has placed a "sell" rating on Nvidia since April 2025. He has repeated this on multiple occasions.

Here's what Nvidia has achieved since then . All it did was more than double its value . Trying to justify this ridiculous expectation now seems even more foolish than before. He claims that Nvidia has been substantially stable over the past 12 months.

Oh, interesting. I didn't know that making gains of more than 25% in one year was considered " fundamentally stable". Perhaps he is simply someone who is used to making fantastic returns.

Well, no. We have refuted that as well because it is not true. It has a success rate of 44% with an average return of 6.5% over the past few years. He should have put all his bets on Nvidia.

Okay, enough with the anger, but I can't stand these speakers who sound ignorant half the time on CNBC. I'm not sure why they give them airtime, but let's get back to the interview anyway.

Given its already enormous size, it's difficult to imagine it growing any further . There are many concerns now about its future growth. As we look ahead to next year, there are concerns about the establishment of data centers.

Clearly, everyone is extremely concerned about the safety of artificial intelligence, and the impact of an election year on that. Furthermore, Nvidia is facing increasing competition and has begun using its balance sheet to compete.

Okay then. As you saw in that video, there were no real or substantive reasons for his position. The bottom line is that when it comes to investing, you must first and foremost understand the financial situation and direction of the company, but you must also have some conviction. I'm not sure that interview showed any of that.

But now, let's move on to our usual program. This is where the optimistic viewpoint becomes interesting. Nvidia has already shown us strong revenue growth, strong margins, huge demand for AI infrastructure , and its profitability is established.

Now, add to all of that the possibility of reducing the number of shares. Earnings per share growth is primarily driven by two engines: profit growth and a decrease in the number of shares. This equates to higher earnings per share.

And now we come to what I believe is the most important part of this channel. Does this announcement make me more optimistic about Nvidia ? I would say yes to some extent, but not because a $ 150 billion share buyback means the stock will rise.

This is an oversimplification of things. I like it because it reinforces several parts of the investment thesis. First, generating cash. Nvidia believes its financial position is strong enough to support huge returns for shareholders while continuing to invest heavily in the business, which leads us to the second point, capital allocation.

Management believes its shares are an attractive enough destination to invest large sums of surplus capital. Third, supporting earnings per share. If these buybacks result in a substantial reduction in the number of diluted shares, future earnings per share growth will receive a positive boost.

Fourth, trust. A $235 billion mandate guarantees nothing, but it is certainly not the action you would expect from a management team that believes the core business is on the verge of collapse.

So, what are some ways you can invest in the stock without buying it today? The answer is through the use of option contracts. As a final reminder , my full options investment program starts tomorrow, September 30th.

You can watch the live segment, or get the recording. You will learn how to generate thousands as a monthly income while we trade together for 30 days, and I will show you my strategic plans and approach to dealing with options. The link is in the description below.

But looking specifically at Nvidia and the options market, I would look to sell the call option for November 20 at $200, to earn $305 per contract in this trade.

Because I am currently a fan of Nvidia, but I would definitely like the valuation more if the stock price returned to $200. What about Robin? Will Nvidia succeed in executing its next major product cycle?

Profit margins. Can Nvidia maintain these exceptional economies of scale as competition increases? And now, fourthly, the number of shares. Does the massive share buyback program result in a net and tangible decrease in the number of shares?

This will tell us how much value this program actually creates for current shareholders.

Many investors still believe that Nvidia's stock has risen too much. I think this is the wrong way to analyze. The question is not how much has Nvidia's stock price actually risen?

The question is, what will this company gain over the next three to five years? What am I paying for those profits today? That is the required calculation.

Because Nvidia in 2026 will be financially very different from what investors valued just a few years ago. We are talking about a company that just made $96 billion in quarterly revenue , nearly $60 billion in quarterly net income, and has now agreed to repurchase $235 billion worth of shares. Those are exceptional figures.

So, Nvidia has just made a huge move. Adding another $150 billion to what it already had, the total would be $235 billion that it could repurchase of its shares.

Does this guarantee a rise in Nvidia's stock price? Of course not. Does this mean that management has officially declared the stock to be undervalued ? no. But does this enhance the company’s enormous cash-generating capacity, profitability, capital allocation flexibility , and potential for earnings per share growth? certainly.

The question I'm asking now is not whether Nvidia's stock has risen too much? But what is the true value of Nvidia's future profits? This is the question I will continue to use to determine the price at which I am willing to buy.