Why is Nvidia share price up today?

In pre-market trading, Nvidia's share or stock (NVDA) price rose 2.9% to $225.07 USD on the NASDAQ. The shares of the chip making company moved higher after a record $150 billion buyback announcement. The valuation on Nvidia is growing by leaps and bounds.

Why is Nvidia share price up today?

NVIDIA's Board of Directors has authorized an additional $150 billion under the company’s existing share repurchase program, the company announced on Monday. The move has led to the rise in the total remaining amount authorized to $235 billion. It is the largest share repurchase authorization increase in the world in history. The firm expects to execute the total remaining program through the fiscal year of 2028.

Jensen Huang, founder and CEO, NVIDIA, said, “NVIDIA’s growth is being driven by a once-in-a-generation platform shift to AI and accelerated computing. Our cash generation gives us the capacity to invest in the technologies that advance this transformation and return capital to shareholders. This authorization reflects our confidence in the long-term opportunity ahead.”

Since August 2024, Nvidia's forward price-to-earnings (P/E) multiple has declined steadily after artificial intelligence began to take hold. Despite a series of strong quarters, the decline has only accelerated this year. It has also led to a boom in the stock price and earnings growth of the company.

Nvidia's forward P/E ratio currently stands at 24 times and not too far removed from the S&P 500's (^GSPC) 20-times multiple. This is despite the firm being one of the fastest-growing companies in the US.