Jim Cramer called NVIDIA radically cheap at 23 times forward earnings and urged a $500 billion buyback, roughly 10% of the chipmaker. Melius' Ben Reitzes kept a Buy rating and raised his price target to $420 on the open-model strategy and physical AI. Shares traded near $217 in premarket Wednesday.
NVIDIA should buy back $500 billion of its stock, about 10% of the company, because shares trade at 23 times earnings, Jim Cramer said.
"Right now, I believe there's no better investment for NVIDIA than NVIDIA," Cramer, host of CNBC's "Mad Money," said Wednesday.
Cramer backs NVIDIA's decision to provide financial backing for AI infrastructure companies such as Anthropic, Lambda and Hut 8 that may struggle to secure multibillion-dollar loans from traditional banks. He told CNBC the chipmaker effectively acts as a banker for the AI data center buildout while profiting from its understanding of GPUs and their residual value. He argued NVIDIA should follow Apple's example by dramatically expanding share repurchases, saying the complicated financing arrangements make its strategy harder for Wall Street to appreciate.
Melius head of research Ben Reitzes echoed the bullish view, maintaining a Buy rating and raising his price target to $420 after NVIDIA's latest earnings. He told CNBC Tuesday that NVIDIA reduced uncertainty around gross margins for the next six quarters, providing greater visibility than most semiconductor companies. Reitzes described the company's push into open and open-weight AI models as a "razor-and-blade strategy," with NVIDIA giving away models while creating demand for its chips, software and infrastructure. He expects physical AI and enterprise applications to require growing numbers of customized models, and said the availability of open models will push Anthropic and OpenAI to keep investing heavily to stay at the AI frontier.
NVIDIA shares were down 0.06% at $217.32 in premarket trading Wednesday, according to Benzinga Pro data. The stock carries a consensus Buy rating with an average price target of $349.15.
A $500 billion buyback, if adopted, would return roughly a tenth of NVIDIA's market value to shareholders and rank among the largest capital return programs in corporate history, potentially lifting earnings per share while supporting the share price. Investors will watch whether NVIDIA management addresses capital allocation on its next earnings call, and whether Cramer's endorsement draws fresh retail buying into the stock.
This article is for informational purposes only and does not constitute investment advice.
