Nvidia nears $6 trillion on AI momentum and record buyback

Nvidia's stock surged 1.9% early Tuesday, contributing to the S&P 500 reaching a new all-time high. This followed a volatile start to the year, with the shares down 11% by March 30 as investors questioned the massive investments in AI infrastructure. The focus has since shifted to broader AI risks, sticky inflation, and potential Federal Reserve rate hikes, making megacap tech stocks like Nvidia more attractive due to their stability.

The company announced a record $150 billion share repurchase, part of its ongoing buyback plan. CEO Jensen Huang called this move a reflection of confidence in long-term growth. Unlike many Big Tech peers, Nvidia is prioritizing buybacks over AI spending, a strategy that analysts like Jordan Klein of Mizuho Securities believe appeals to investors by sharing high profit margins.

Despite these gains, Nvidia has underperformed the broader semiconductor sector this year. The Philadelphia Stock Exchange Semiconductor Index is up 87%, with companies like Micron Technology and Intel seeing even larger gains. Nvidia's massive scale means its stock moves less dramatically, trading at a valuation of less than 18 times projected earnings, near a decade low.

With a market capitalization nearing $5.8 trillion, Nvidia's performance has significantly impacted the S&P 500. The company's blend of rapid growth, attractive valuation, and record buybacks has driven a 30% year-to-date rise and added $1.3 trillion in market value. This concentration means Nvidia's movements now heavily influence the broader market.