<\/p>\n
Nvidia is on the verge of becoming the first company with a $6 trillion market capitalisation as investors rotate back into the artificial-intelligence chipmaker.<\/p>\n
The stock is once more at a record high after the company gave a robust revenue outlook and announced the biggest buyback in history, which takes advantage of a valuation that\u2019s near multi-year lows. Those twin pillars \u2014 strong growth and a cheap multiple \u2014 stand out, especially as investors grapple with high interest rates and tepid economic data.<\/p>\n
\u201cNvidia is attractive on both a growth basis and a value basis, and it looks like a haven from any damage higher rates could do to the economy,\u201d said Jim Awad, senior managing director at Clearstead Advisors, which owns Nvidia shares. \u201cAll of which makes it such an attractive proposition here and a place people should continue to gravitate to if they have concerns.\u201d<\/p>\n
The shares are up 28% this year in a rally that has added $1.2 trillion to Nvidia\u2019s market capitalisation, bringing it to just shy of $5.8 trillion. The company also is by far the biggest contributor to the S&P 500 Index\u2019s 14% gain in 2026.<\/p>\n<\/p>\n
The move is particularly striking considering the stock was down 11% for the year on March 30 as investors questioned the hundreds of billions of dollars being spent on AI infrastructure. Since then, sentiment around the AI landscape has flipped, with more existential questions about the potential threats it poses to humanity now leading the conversation. Meanwhile, inflation risks and the likelihood of interest-rate hikes by the Federal Reserve have made megacap technology companies like Nvidia look relatively safe to investors.<\/p>\n
\u201cAs rate hike fears have materialised money starts to move into these megacap tech stocks because they\u2019re a little bit more resistant to rate hikes,\u201d said Larry Tentarelli of Blue Chip Daily, adding that the semiconductor sector has also seen a rebound spurred by Meta Platforms Inc.\u2019s Muse AI agent. There\u2019s \u201cbig rotation back into semis, a big rotation back into the megacaps and both of those play out well for Nvidia.\u201d<\/p>\n
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The lure for investors was underlined by Nvidia\u2019s authorisation of an additional $150 billion under its existing share-repurchase program, which Chief Executive Officer Jensen Huang said \u201creflects our confidence in the long-term opportunity ahead.\u201d Prior to that, he called Nvidia \u201cthe world\u2019s first and only growth value stock.\u201d<\/p>\n
Wall Street tends to like buybacks as they represent payouts to stockholders and reduce a companies\u2019 outstanding shares, providing a lift to earnings per share. Nvidia\u2019s repurchase is unique among Big Tech companies, which are primarily using their cash for AI spending, with the exception of Apple Inc.<\/p>\n
The buyback \u201cis what investors want to see,\u201d as it shows the company \u201csharing the wealth of their crazy high profit margins with investors,\u201d Mizuho Securities analyst Jordan Klein wrote in a Sept. 28 note to clients.<\/p>\n
While there is an argument that buybacks are just a way for companies to inflate their earnings per share without organic growth, that hardly applies to Nvidia. In its previous report, the chipmaker projected that sales would expand 70% in fiscal 2028, well above the 45% growth that had been expected.<\/p>\n
\u201cThe reason it\u2019s able to do this huge buyback is because it is growing so fast that it has more money than it knows what to do with,\u201d Clearstead\u2019s Awad said. \u201cIt remains on the cutting edge of an AI revolution that shows no signs of abating, and the demand it is seeing seems insensitive to rising rates, which adds to confidence in the sustainability.\u201d<\/p>\n
Nvidia\u2019s net income is expected to double in fiscal 2027, which ends in January, with revenue leaping 90%. A year ago, both figures rose 65%.<\/p>\n
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But even with all that, Nvidia is still lagging the overall semiconductor sector this year. The Philadelphia Stock Exchange Semiconductor Index has gained 86% in 2026, fuelled by companies like Micron Technology, Marvell Technology and Intel Corp, whose stock prices are up more than 200% even as they trade below their record highs hit earlier in the year.<\/p>\n
Of course, at least part of Nvidia\u2019s problem is simply the market\u2019s physics \u2014 it\u2019s now the biggest stock in the world, and it takes a lot to jolt shares that have been far and away the best performers in the S&P 500 for a decade. Can this growth just keep on going?<\/p>\n
That question is at the heart of why the stock now trades at about 17 times earnings expected over the next 12 months, close to its lowest level in 10 years and a discount to the S&P 500 Index, which is priced at 19 times forward earnings.<\/p>\n
\u201cNvidia is a cheap stock, but the problem that Nvidia runs into, it\u2019s almost a victim of its own success,\u201d Tentarelli said. \u201cIt just takes so much to move the needle.\u201d<\/p>\n
Tech chart of the day<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
#Nvidia #heads #6trn #chipmaker #record<\/p>\n","protected":false},"excerpt":{"rendered":"
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