Nvidia has authorized the largest share-buyback increase in U.S. corporate history, giving CEO Jensen Huang a powerful way to return cash to shareholders while signaling confidence in the company's long-term AI growth.
Key Points
- Nvidia's board approved an additional $150 billion for share repurchases.
- The authorization brings Nvidia's total remaining buyback capacity to about $235 billion.
- The new authorization surpasses Apple's previous U.S. corporate record of $110 billion set in 2024.
- Nvidia's shares were trading at about 16.5 times forward earnings, according to LSEG data cited by Reuters.
- Jensen Huang said Nvidia's cash generation allows it to invest in AI while also returning capital to shareholders.
- The decision comes as investors continue debating how long the current AI infrastructure spending boom can continue.
Nvidia is turning its enormous AI-driven cash generation into an equally enormous bet on its own stock.
The chipmaker announced on September 28 that its board had approved an additional $150 billion in share-buyback authorization, creating the largest buyback increase ever announced by a U.S. company. The move lifts Nvidia's remaining authorization to roughly $235 billion through fiscal 2028.
Why Nvidia Is Buying Back So Much Stock
Share buybacks allow a company to use its cash to purchase its own shares from the market. By reducing the number of shares outstanding, buybacks can increase earnings per share when profits remain constant or continue growing.
Nvidia's decision is particularly notable because the company is still investing heavily in the AI infrastructure boom. Rather than choosing between massive investment and shareholder returns, Huang is arguing that Nvidia's cash generation is strong enough to support both.
"Our cash generation gives us the capacity to invest in the technologies that advance this transformation and return capital to shareholders," Huang said when announcing the new authorization.
Nvidia's Stock Has Become Cheaper Relative to Earnings
The timing of the announcement is important. Reuters reported that Nvidia was trading at approximately 16.5 times its expected earnings over the next 12 months, its lowest forward earnings multiple since January 2015.
That multiple was also below Nvidia's 15-year average of roughly 30, according to LSEG data cited by Reuters. A lower earnings multiple can make a buyback more attractive to a company if management believes the market price does not fully reflect its expected future earnings.
That does not necessarily mean Nvidia's shares are objectively undervalued. It reflects the valuation relative to historical earnings multiples and the expectations already embedded in the stock price.
The Biggest Buyback in Corporate America
Nvidia's $150 billion increase exceeds Apple's $110 billion buyback authorization announced in 2024. The size of Nvidia's new authorization is extraordinary even by the standards of America's largest technology companies.
The additional authorization alone is larger than the market value of roughly 84% of S&P 500 companies, according to LSEG data cited by Reuters.
Nvidia Still Has Huge AI Growth Expectations
Nvidia's decision comes despite growing questions about whether the extraordinary pace of AI infrastructure spending can continue indefinitely.
For now, the company's financial performance remains exceptionally strong. Nvidia generated nearly $100 billion in free cash flow during its most recent fiscal year, while consensus estimates cited by the Financial Times project free cash flow could reach approximately $329 billion in fiscal 2028.
Nvidia has also forecast roughly 70% revenue growth for fiscal 2028, according to Reuters, indicating that management continues to expect substantial demand for its AI computing products.
The AI Spending Question
Nvidia's fortunes are closely connected to the enormous amounts of money being invested in data centers and AI infrastructure by technology companies.
OpenAI, Anthropic, Google and other major AI companies are among Nvidia's customers or users of infrastructure powered by its chips. That creates a powerful source of demand, but it also means Nvidia's future growth depends partly on whether those companies continue spending at very high levels.
Analysts cited by Reuters have noted that the AI buildout will eventually mature, although Nvidia's current cash generation gives it significant financial capacity while that transition develops.
Investors Are Watching the Buyback Closely
Large buybacks can send different signals depending on a company's circumstances. For mature companies with slowing growth, they can indicate that management has fewer opportunities to reinvest excess cash.
Nvidia's situation is different because the company continues to invest heavily in research, product development and AI infrastructure while generating substantial free cash flow. The buyback therefore represents an additional use of capital rather than a replacement for investment.
The key question for investors is whether Nvidia's future earnings growth will remain strong enough to justify its current valuation and the scale of capital being returned to shareholders.
The Bigger Picture
Nvidia's record buyback highlights just how much cash the AI boom is generating for the world's leading AI-chip supplier. Huang is effectively pursuing two strategies at once: continue investing in the technology driving the AI infrastructure buildout while using a portion of Nvidia's cash generation to buy back shares. The scale of the authorization reflects management's confidence, but the long-term value of the strategy will ultimately depend on Nvidia's future earnings, AI demand and the pace of industry investment.
