Nvidia's $150B buyback could fuel next stock rally

The hot trade into year-end and early 2027 may just be a tried-and-true one: Nvidia ( NVDA ).

And the NVDA bulls could thank the company's jaw-dropping new stock buyback plan for any added momentum.

The king of AI chips revealed a stunning new $150 billion stock buyback plan on Monday — the largest share repurchase authorization increase in history. It brings the company's total buyback authorization to $235 billion.

Nvidia shares have typically gained a solid 24% in the 12 months after announcing a large stock buyback plan, according to data crunched by FedWatch Advisors founder Ben Emons.

Interestingly, Nvidia's stock repurchase plans haven't produced the strongest performance follow‑through, partly because the company's balance sheet carries elevated equity exposure, Emons pointed out.

Alphabet ( GOOG , GOOGL ) has the strongest 12-month return at over 40%.

Stocks typically rise by about 3.5% in the three‑day window around a large buyback announcement, Emons' research shows. Firms announcing large buybacks have historically delivered about 12% returns over four years.

Nvidia's Huang likely sees a great moment to buy back the company's shares on the cheap, ahead of further acceleration in AI development.

Nvidia's forward price-to-earnings (P/E) multiple has declined steadily since August 2024, when artificial intelligence began to take hold, unleashing a boom in the company's stock price and earnings growth.

The decline has only accelerated this year despite a series of strong quarters.

The forward P/E ratio for Nvidia currently stands at 24 times, not too far removed from the S&P 500's ( ^GSPC ) 20-times multiple, despite the company being one of the fastest-growing companies in corporate America.

Brian Sozzi is Yahoo Finance's Executive Editor, host of the Sozzi Unleashed morning show, the ' Power Players With Brian Sozzi' podcast and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi , Instagram , and LinkedIn . Tips on stories? Email brian.sozzi@yahoofinance.com.