Why NVIDIA Stock May Still Be a Bargain Despite Its Premium Price Tag: A $60 Billion Signal

Key Insights

• NVIDIA stock has seen a remarkable 10x growth since ChatGPT's launch, fueled by unprecedented AI infrastructure demand
• Current valuation metrics are reasonable compared to historical peaks, with P/E ratio reflecting normalized profitability
• Management's newly approved $60 billion stock buyback program signals strong confidence in sustained growth
• Beyond AI training, NVIDIA's future growth potential lies in advanced computing for robotics, quantum computing, and autonomous systems

No company has captured the artificial intelligence (AI) revolution quite like semiconductor leader NVIDIA (NASDAQ: NVDA). Investors who positioned themselves in this chipmaker when ChatGPT debuted in November 2022 have witnessed their investment multiply approximately tenfold.

Major technology corporations including Microsoft, Alphabet, Meta Platforms, Amazon, and Oracle have allocated hundreds of billions in capital expenditures toward AI infrastructure development—with NVIDIA's industry-leading chips capturing a significant portion of this spending.

This extraordinary demand has propelled NVIDIA's market capitalization from approximately $345 billion at the AI revolution's beginning to over $4 trillion today, making it one of the largest companies by market cap in 2025.

With such tremendous gains already realized, many investors naturally question whether NVIDIA's best performance days have passed. However, just as skepticism grows, NVIDIA's leadership has reinforced confidence with a substantial $60 billion commitment that deserves closer examination.

Analyzing NVIDIA's Current Valuation

NVIDIA is currently trading in alignment with its three-year average price-to-sales (P/S) ratio and significantly below the peak valuation it commanded during the initial AI boom enthusiasm.

While NVIDIA might appear relatively "affordable" compared to previous periods of AI market excitement, this assessment remains contextual. During the late 1990s dot-com bubble, many high-growth technology stocks reached price-to-sales multiples between 30 and 40.

At first glance, NVIDIA's price-to-earnings (P/E) multiple seems considerably discounted compared to both its historical average and recent peak levels. The critical nuance here is that the AI trend has dramatically increased NVIDIA's profitability. This means the earnings component of its P/E ratio has expanded significantly. In other words, NVIDIA's current P/E of 49 reflects normalized profitability rather than investors suddenly applying a less aggressive growth multiple to the company.

On an absolute basis, NVIDIA's valuation remains demanding. However, for investors questioning whether these shares are truly overvalued, management's latest announcement provides compelling insight.

The $60 Billion Vote of Confidence

During 2025's first half, NVIDIA repurchased 193 million shares of its common stock for $24.2 billion. More significantly, during the late August second-quarter earnings call, management revealed an even more substantial move: The board of directors authorized an additional $60 billion stock buyback program.

Such repurchase initiatives typically indicate management's confidence that a company's cash flows are sustainable and that acquiring its own shares represents one of the most strategic capital allocations. In NVIDIA's case, this move may have additional strategic significance.

For several years, NVIDIA's growth narrative has centered on its chips being utilized for training large language models (LLMs) and other generative AI applications. Looking forward, however, the most significant upside will come from implementation in more sophisticated applications like robotics, quantum computing, and autonomous systems—each representing potential trillion-dollar markets that will require significant computing power from next-generation NVIDIA chip architectures.

While NVIDIA's successor to the Blackwell architecture, codenamed Rubin, is expected to ship next year, the timing of NVIDIA's next major growth phase will be critical. The full market impact of these advanced applications could take 5-10 years to substantially transform NVIDIA's profitability profile. In the interim, the company will likely continue growing, albeit potentially at a more moderate pace.

This context makes the new stock buyback program particularly strategic. By aggressively reducing outstanding shares over the next few years, NVIDIA can strengthen earnings-per-share (EPS) growth during this transitional phase of the AI narrative. Effectively, the buyback program serves as a bridge—maintaining robust EPS momentum in the near term while more advanced AI infrastructure development continues scaling in the background.

NVIDIA's Position in the Broader Technology Ecosystem

NVIDIA's chips aren't just transforming AI—they're also fundamental infrastructure components for many Web3 and blockchain applications. High-performance GPUs provide the computational backbone that powers complex cryptographic operations, decentralized finance platforms, and next-generation blockchain networks.

As digital asset markets mature, the demand for efficient computing solutions continues growing. Advanced trading platforms and digital asset exchanges rely increasingly on sophisticated infrastructure powered by high-performance chips like those NVIDIA produces. This creates a complementary growth avenue alongside the company's AI-focused business segments.

Investment Perspective

NVIDIA remains strategically positioned to benefit from the secular growth drivers powering AI infrastructure investment by major technology companies. Simultaneously, the company's capacity to return capital through substantial stock buybacks highlights both the strength of its cash generation capabilities and management's commitment to shareholder value.

The company's clear technological leadership, demonstrated through successive generations of increasingly powerful chip architectures, establishes a sustainable competitive advantage in both AI and advanced computing markets. For investors seeking exposure to technological transformation across multiple sectors, NVIDIA represents a compelling opportunity with both immediate performance potential and long-term growth prospects.

NVIDIA's combination of structural growth catalysts and shareholder-focused capital allocation makes it a standout investment opportunity in the rapidly evolving computational landscape, despite its already substantial market valuation.