NVDA is the top buy; $235B buyback shrinks share count, integrated AI stack and supply dominance drive growth, and 14.6x forward P/E offers upside vs S&P 500 average.

I thought I was being overly optimistic about Nvidia's stock. I have ranked it as the best stock you can buy this year. I own Nvidia stock in my investment portfolio. It is one of my largest financial centers, and I am preparing to buy more of it.

So, I thought I was one of the most optimistic investors in Nvidia stock. But today, on September 28, Nvidia's management team announced an additional $150 billion share buyback mandate, meaning they will purchase additional Nvidia shares for that amount, in addition to their remaining $85 billion mandate.

Thus, from now until the end of the next fiscal year, Nvidia plans to buy back more than $230 billion of its own shares.

So, I apologize, the Nvidia management team is clearly the most optimistic about Nvidia's stock, and I don't blame them for that. In this video, I will highlight some of the reasons that made me very optimistic about Nvidia stock, why I ranked it highly, and why I believe the stock still has a lot of room to rise, even though it is a company with a market value exceeding $5 trillion.

You can see this authorization announcement here on September 28 from Nvidia. This mandate, i.e., this buyback program, is several times larger than what they have done previously.

For example, in fiscal year 2026, they repurchased $40 billion worth of shares. So far in fiscal year 2027, they have repurchased $53 billion worth of shares, $13 billion more than the previous year, and they still have time to buy more.

Their new mandate of $150 billion will be added to the existing $85 billion, bringing the total to $235 billion from now until next year.

This is something I have been expecting and predicting for many months, if you have been following my videos. Because many of the negative aspects that I see, or rather, many of the concerns that I see from investors in the comments section, emails, and discussions I have with them, are that the company’s market value has already reached $5.4 trillion.

How much higher can the stock rise? It doesn't have much room to rise because its market value is already very high.

In response to this argument, I suggested that if you think about the equation for market value, it is equal to the market price multiplied by the number of outstanding shares.

Market price multiplied by the number of outstanding shares. If Nvidia spends hundreds of billions of dollars each year to buy back shares, this reduces the number of outstanding shares.

Therefore, the market price could rise while the number of outstanding shares falls, and the overall market capitalization could continue to rise because the number of outstanding shares will continue to fall over the next five or ten years, if my estimates are close to what I expect to happen, which is generating hundreds of billions of dollars in free cash flow for this company between now and the next five or ten years.

So, one of the things that has propelled Nvidia forward in the data center market is its integrated offering of AI factories. It doesn't just sell graphics processing units. This is its flagship product.

This is the main product that is advertised and that almost every investor knows about. But it also has the "CODA" programming platform, which is the software system that accompanies the graphics processing unit.

It also sells networking equipment that connects all these graphics processing units into one large cluster. It also has central processing units. It also has integrated circuits, and all of that works together to deliver a fully integrated system that the buyer can get ready to use.

They don't need to search for connectors from Broadcom or components from Marvell or other companies and try to put all of that together to build a data center. They could simply go to Nvidia and say, "Give us everything."

"Give us 10 of everything or 50 of everything." "They handed it over to us on this date." And Nvidia is capable of handling all of that. This is beneficial for many buyers of this technology.

As an entrepreneur, and I know many of you are business owners who follow this channel, you can imagine that you are dealing with many different suppliers and many projects and things that fall under your responsibility.

If you can consolidate at least one part of your business, that is a helpful incentive to do so, especially if that provider is very good at what they do. They offer you a product that outperforms its competitors at a reasonable enough price, and delivers a strong total cost of ownership that is better than if you were to connect, build, and customize all these different components yourself.

Now, don't misunderstand me. Some companies still do that, right? Especially large companies like Alphabet, Amazon and Microsoft, because this makes up a large part of their business.

They are spending hundreds of billions of dollars to build these data centers. This is something they want to excel at. If they can find a way to deliver 3% better performance in their data center and they have to spend more time doing it, they are willing to do it because it is a big part of their business. It's a big part of their competitive advantage.

However, not all companies want to do that. This is mainly concentrated among broadband companies, such as Amazon, Microsoft, Meta, and Alphabet. Most other companies that build AI, and even most emerging clouds that build AI, do not want to get involved in all of this work.

They want to focus on other areas of their business that they see as more strategically important. Therefore, they prefer this integrated offering from Nvidia.

One additional key factor has changed in Nvidia's favor in recent years. Because Nvidia’s business is so huge in terms of revenue over the past 12 months, and in terms of the amount of money it spends on suppliers, supply agreements, and the purchase of components and services, it now has greater bargaining power.

Because of Nvidia’s reach, increased size and importance, it is now in a stronger position with suppliers such as Taiwan Semiconductor Manufacturing Company, SK Hynix, Samsung and Micron.

It can get more supplies, more capacity and better terms because of this size factor, which has really changed since 2023, and perhaps 2024 is when the equation will change in Nvidia’s favor as its business grows.

Therefore, they have partnered with several of their suppliers and secured large quantities of stock in order to meet this demand. Their liabilities rose from 119 billion to 279 billion in the last quarter. So, they secured plenty of supplies.

Remember that this industry is constrained by supply. There is demand that exceeds supply, and near-term revenue generation for many of these companies will depend on how much supply they can secure.

You will start hearing this from many companies, and you have already started hearing many of them say that we are facing supply constraints. We would have been able to generate more revenue if we had more supplies.

With Nvidia's acquisition of those supplies, it has strengthened its position, while everyone else has to wait until Nvidia has "had its fill" before they get their share. This is an important factor when we look ahead to the next two years.

Nvidia has also proven to investors its ability to innovate strongly year after year. Its next-generation "Vera Rubin" technology is 30 times better in terms of symbols per megawatt compared to the previous "Grace Blackwell" technology.

That's a huge improvement in just one year, which is motivating companies to upgrade their older technologies that they may have installed in 2022. And here we are now in 2026 and 2027.

After only 4 or 5 years, they have a huge incentive to upgrade to the latest technologies because they offer a better total cost of ownership, and they keep competitors several steps behind Nvidia as it continues to innovate at a faster pace than competitors can keep up with.

Nvidia has recently been innovating even in categories where it has not had a strong presence in the long term, specifically in central processing units (CPUs). Nvidia's recent advancements in central processing units have led to sales in the billions, even tens of billions, of dollars, and Nvidia expects this figure to double next year and likely continue to increase.

Buyers of Nvidia technologies get a good return on investment, and the value of these components remains stable. In fact, in the case of the B200, also known as the Blackwell 200, values became higher two years later than they were initially because demand in the secondary market is increasing, and people are raising the prices for access to this technology.

It reached 158% of the initial price after a year and a half. Four years after its launch, the H100 technology still retains 58% of its value. Nvidia's A100 technology, which was launched more than 6 years ago, still retains 25% of its value.

Therefore, the return on invested capital for people who buy this product is strong and continues to be sufficient to justify allocating huge sums to these products.

This is even before we see large payouts of revenue from physical artificial intelligence, such as space, robotics technologies, self-driving taxis, robotics, and communications.

I think the next thing that will pay off will be self-driving taxis. We are seeing significant investments from many car manufacturers in this technology. Nvidia announces significant growth in its automotive sector.

Within two years, I wouldn't be surprised if the growth rate of self-driving taxis caused Nvidia's automotive sector revenues to double or triple.

Therefore, the risks are currently factored into Nvidia's assessment in a substantial way. I have shared with you a thriving company that is at least one step ahead of the competition with new innovations in the pipeline, and is innovating faster than its competitors.

It operates in a market worth trillions of dollars and is expanding as we speak. The company expects revenue growth of 70% in the next fiscal year with operating profit margins approaching 65%.

This is not a business that would typically sell at a forward price-to-earnings ratio of only 14.66.

The reason Nvidia is being sold at a relatively cheap valuation is roughly half the stock price of companies like Walmart, Costco, or other companies that are growing more slowly or do not have the margins or opportunities that Nvidia does.

But the reason Nvidia is trading at such a cheap price is that the risks are very heavily factored into its valuation. Therefore, this is not a stock that investors are completely satisfied with.

This is not a stock where investors believe success is inevitable, is it?

With Nvidia, risks are present every day. We are talking about risks. Will the AI data center bubble burst? What will happen to OpenAI and Anthropic? They are losing money, can they continue?

Will they be sustainable? What about all these circular financing arrangements? What about the growing competition from AMD, Intel, and the application-specific integrated circuits created by Amazon, Alphabet, Microsoft, Meta, and others?

Therefore, risks are discussed and consolidated every day, and there are certain days when an announcement from an AI company causes Nvidia's stock to drop by 2, 3, 4, or 5%. Therefore, these risks are calculated.

It was taken into consideration during the evaluation. This is what gives me confidence, a lot of confidence in Nvidia stock, because I don't see this kind of satisfaction. I don't see the rating rising straight up without taking into account these emerging threats.

On the contrary, I see it quite differently. I think investors are overly sensitive. Whenever any development occurs, they rush to sell. Isn't that so? They are on constant alert.

They are walking on eggshells, ready to sell as soon as they see a report about anything in the field of artificial intelligence that makes them concerned about Nvidia's stock.

With a forward price-to-earnings ratio of 14.6, while the average S&P 500 stock is trading at a forward price-to-earnings ratio of around 25, Nvidia is trading at a discount to the average S&P 500 stock, while in fact it is one of the best performing companies when measured by all the important business metrics: revenue growth, profit margin, cash flow, cash flow from operations versus sales, balance sheet, competitive advantage, etc. Therefore, these negative factors such as increased competition and unfavorable sector economics have been taken into account and incorporated into the company's valuation.

Therefore, today, after Nvidia’s presentation, I also updated my fair value estimate for the company, and I calculated a fair value of $344. The current market price is $230. Therefore, I see a potential rise in Nvidia's stock by about 50% over the next 12 to 18 months.

This is probably why I own Nvidia shares, why I'm interested in adding more of them, and why I rank Nvidia as the best stock you can buy right now.