Nvidia Announces Significant Share Buyback Increase

Nvidia has made headlines by increasing its share buyback authorization by an impressive $150 billion, surpassing Apple’s previous record of $110 billion approved in 2024. This move comes as the chipmaker’s stock hovers near its lowest valuation in over a decade.

The company’s shares, based in Santa Clara, California, saw a more than 2% rise in morning trading. Currently, Nvidia boasts a market cap exceeding $5.5 trillion, and its stock has climbed over 20% this year, as of Friday’s close.

With this new authorization, Nvidia’s buyback capacity now stands at $235 billion, which the company anticipates will be utilized through fiscal 2028. This is largely driven by a surge in demand for AI training and inference, which is significantly boosting its cash flow.

Nvidia shares are trading at around 16.5 times their 12-month forward earnings. Interestingly, this figure is the lowest since January 2015, and well below the 15-year average of 30, reflecting some analysts’ concerns about slowing profit growth expectations.

This announcement arrives at a time when stock buybacks are generally on the decline, having dropped about 50% from July to September 23rd.

CEO Jensen Huang stated, “Our cash generation gives us the capacity to invest in the technologies that advance this transformation and return capital to shareholders.” This sentiment underscores the confidence Nvidia has in its financial position.

It’s worth noting that this $150 billion buyback authorization exceeds the market capitalization of roughly 84% of the S&P 500 constituents, based on data compiled by LSEG.

Analyst Jacob Bourne from Emarketer expressed that the ongoing AI expansion may not maintain its current velocity indefinitely, but he believes Nvidia is signaling strong and sustained demand for its hardware and services.

Bourne further emphasized Nvidia’s robust cash generation, suggesting that it can continue to invest heavily in its business while returning capital to its shareholders.

As of the end of the July quarter, Nvidia reported having $22.44 billion in cash and cash equivalents. Moreover, the company has estimated a 70% revenue growth for fiscal 2028, which should reassure investors who are beginning to wonder about the longevity of the AI spending boom following years of rapid growth.