Nvidia's Chip Market Gap Narrowing Amid Share Buyback Hopes

Nvidia's underperformance in the semiconductor market may be coming to an end, according to investment firm Melius Research. The company's shares have lagged behind the Philadelphia Semiconductor Index, which has seen a near 105% jump over the past year, while Nvidia's stock is up slightly more than 30%. However, Ben Reitzes of Melius believes that this gap could narrow if Nvidia increases its cash return to shareholders through measures such as share buybacks.

Nvidia raised $25 billion in a bond offering in June, which some analysts have speculated could be used to fund an increased pace of share buybacks. This move could help the company stand out in a market where rate fears are rising and issuances are increasing.