Cramer Urges Nvidia to Launch Apple-Style $500 Billion Stock Buyback Programme

Nvidia's financial performance continues to accelerate, but its valuation has not expanded alongside earnings. The chipmaker reported fiscal second-quarter revenue of $96.2 billion, up 106% from a year earlier, while Data Center revenue jumped 117% to $89 billion.

CNBC host Jim Cramer believes Nvidia should launch a $500 billion stock-buyback programme, arguing that the company remains 'radically cheap' at roughly 23 times this year's earnings estimates. He notes that Nvidia has no such plan in place and has only about $99.3 billion remaining under its existing repurchase authorisation.

Cramer's proposal is based on a bullish assumption: that Nvidia will generate enough cash to fund AI expansion while buying back more stock. Analysts like TD Cowen's Joshua Buchalter agree, describing the shares as 'materially undervalued' and noting that demand could support substantially more revenue if supply were available.

However, others are skeptical of the proposal. Bank of America analyst Vivek Arya thinks Nvidia could go further in returning cash to shareholders, but notes that such a large repurchase programme would require years of cash generation unless Nvidia dramatically altered how it deploys its balance sheet.