Nvidia expands buyback by $150bn, shares gain nearly 2%

The record authorization sends a positive signal for Nvidia and the broader AI sector, arriving after questions about the durability of the AI spending boom, and indicates the company considers its own stock undervalued. A buyback creates steady demand for the shares over time, though an authorization represents an upper limit rather than a firm pledge, and the firm may pause repurchases at will. The move could also bolster sentiment across large-cap technology at a time when aggregate corporate buybacks have been declining. Anyone viewing the low valuation as a support level should keep in mind that some analysts interpret the multiple as an indication of moderating profit growth expectations, making execution pace and the next earnings report the critical milestones.

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Before we go on, let me put my hand up to say I am bit behind the curve on this news item.

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Nvidia is committing a record $150 billion to its own shares, wagering that AI demand and robust cash flow make repurchases worthwhile even as its valuation has contracted.

• Nvidia's board approved a $150 billion increase to its share buyback program, raising the total remaining authorization to $235 billion, which the firm says is the largest boost in history.
• The company intends to complete the entire remaining program by fiscal year 2028.
• CEO Jensen Huang stated that the AI and accelerated computing transition is fuelling expansion and that cash generation enables Nvidia to invest while also returning capital to shareholders.
• Shares climbed nearly 2% and have gained more than 20% this year, while the stock trades near its lowest earnings multiple since 2015, based on LSEG data cited by Reuters.
• The increase tops Apple's $110 billion approval in 2024 and exceeds the market value of about 84% of S&P 500 companies, even as overall US buybacks dropped about 50% from July through September 23.
• Nvidia ended the July quarter with around $22 billion in cash and last announced an $80 billion buyback in May, and it projected roughly 70% revenue growth for fiscal 2028 last month.

Nvidia lifted its share repurchase authorization by a record $150 billion, pushing the total remaining sum to $235 billion, the company revealed on Monday. The chipmaker said it is the biggest increase to a buyback program on record and that it expects to use the full remaining amount through fiscal 2028.

Nvidia stock rose nearly 2% on the announcement, per Reuters, and is up more than 20% year to date. The increase surpasses the $110 billion approval Apple received in 2024 and is greater than the market capitalisation of roughly 84% of S&P 500 members, based on LSEG data. CNBC pegged Nvidia's market value at about $5.4 trillion.

Chief executive Jensen Huang said the company's expansion is being propelled by a once-in-a-generation shift towards AI and accelerated computing, and that strong cash generation allows Nvidia to invest in the technologies behind that shift while also returning capital to investors. He said the authorization shows confidence in the long-term prospects ahead.

The announcement comes as Nvidia's valuation has compressed. Reuters, citing LSEG data, reported the stock is trading at roughly 16.5 times forward 12-month earnings, its lowest multiple since January 2015 and far below its 15-year average of about 30, which some analysts view as an indication of slowing profit growth expectations. Yahoo Finance said the low valuation is probably part of the reasoning behind the move. The news also arrives during a broad downturn in buybacks, which declined by about 50% from July through September 23.

An analyst at Emarketer said the AI buildout will not continue at its current pace indefinitely, but that Nvidia is expressing confidence that demand for its hardware and services has staying power. The analyst added that the company's cash generation is strong enough to support heavy investment while also returning capital.

Nvidia ended the July quarter with around $22 billion in cash and cash equivalents, and it last announced an $80 billion buyback in May. Last month it projected roughly 70% revenue growth for fiscal 2028, which reassured investors who had questioned how long the AI spending surge can persist. The company's filings also state that its buyback program can be suspended at any time at its discretion, and that repurchases can be conducted in the open market, through privately negotiated transactions or via structured agreements.

Focus now shifts to how quickly Nvidia executes the program and whether the repurchase pace, along with its investment in the AI buildout, continues to support sentiment towards the stock.