Nvidia Corp (NASDAQ:NVDA) is generating enough cash from the AI infrastructure boom to fund its next wave of growth and still put $150 billion behind its own stock.

That makes the buyback more than a capital-allocation headline. It raises a sharper question for investors: Does Nvidia’s valuation justify putting so much cash into NVDA shares?

Nvidia’s Valuation Gets Interesting

Nvidia’s board approved an additional $150 billion for share repurchases, taking its remaining authorization to $235 billion through fiscal 2028. The company called it the largest increase to its buyback authorization in history.

The valuation backdrop makes the move more interesting. Benzinga Pro data puts Nvidia at 24.8 times forward earnings and 28.9 times trailing earnings, with a price-to-earnings growth, or PEG, ratio of 0.48. The PEG ratio compares a stock’s earnings multiple with its expected earnings growth, offering another way to assess whether a high P/E is supported by rapid profit expansion.

That does not make Nvidia objectively cheap. But it does make the valuation harder to dismiss given the company’s growth.

Evan Schlossman, principal at Neostellar Capital, said Nvidia’s "recent growth significantly outpaces the broader market" while its valuation is broadly comparable with the S&P 500 on a forward-earnings basis.

Importantly, Schlossman stopped short of saying Nvidia considers its shares undervalued. Instead, he pointed to the "combination of growth, cash generation and valuation" as a reason repurchases could be an attractive use of capital.

The AI Cash Machine Matters

That cash generation is central to the buyback thesis.

Nvidia CEO Jensen Huang said the company’s "cash generation gives us the capacity to invest in the technologies that advance this transformation and return capital to shareholders." Nvidia framed the move as a reflection of confidence in the long-term AI opportunity.

John Belton, portfolio manager at Gabelli Funds, takes the cash argument further. He said Nvidia’s $235 billion authorization "looks more consistent with half of free cash flow generation expected over the next ~18 months."

That makes the buyback less about Nvidia running out of places to invest and more about the scale of cash it expects the AI cycle to produce.

What Investors Should Watch Next

The key question is whether Nvidia can keep growing earnings and free cash flow fast enough to make the repurchases increasingly meaningful on a per-share basis. A falling share count can amplify earnings growth, but only if the underlying business keeps expanding.

For investors, the next catalyst is therefore not the buyback itself.

Watch Nvidia’s earnings growth, AI infrastructure demand and cash generation. If those continue to outpace the valuation investors are paying, the $150 billion authorization could look less like financial engineering and more like a bet that Nvidia’s AI cash machine still has plenty of runway.

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