Nvidia approves record $150 billion share buyback plan as AI boom powers cash generation

Nvidia has approved an additional $150 billion for share repurchases under its existing buyback programme, marking the largest increase in repurchase authorisation in the chipmaker’s history as its artificial intelligence business continues to generate massive cash flows. Shares of Nvidia were up 0.22% in pre-market trade following the announcement.

The latest approval takes the total amount remaining under Nvidia’s share repurchase authorisation to $235 billion. The California-based company expects to execute the programme through fiscal 2028, giving it considerable flexibility to return capital to shareholders over the next several quarters.

The size of the buyback underlines the dramatic change in Nvidia’s financial position since the generative AI boom began. Once primarily known for graphics processors used in gaming, Nvidia has become the dominant supplier of high-end computing hardware used to train and run artificial intelligence models.

"Nvidia’s growth is being driven by a once-in-a-generation platform shift to AI and accelerated computing,” CEO Jensen Huang said.

Demand for Nvidia’s GPUs and accompanying networking and software products has surged as technology companies, governments and AI developers pour billions of dollars into data centres capable of training and deploying increasingly sophisticated AI models.

The company’s financial performance has reflected that spending wave. Nvidia reported revenue of $96.2 billion for its fiscal second quarter, more than double the level recorded a year earlier, while data-centre revenue surged 117% to $89 billion.

The latest buyback authorisation also highlights Nvidia’s ability to fund aggressive investments in new products and infrastructure while simultaneously returning substantial capital to shareholders.

Share repurchases reduce the number of shares outstanding when completed and can increase earnings per share, though the eventual impact depends on the price at which a company buys its stock and the pace of purchases. Nvidia has not committed to spending the entire $235 billion immediately, with the programme expected to run through fiscal 2028.

The chipmaker is pushing ahead with successive generations of AI hardware and recently reported continued strong demand across its data-centre business. It has also been expanding partnerships aimed at financing the enormous amount of infrastructure required for AI computing.

In August, Nvidia announced partnerships with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR aimed at mobilising more than $500 billion of third-party capital over time for AI infrastructure.

The record buyback increase therefore comes as Nvidia seeks to balance two uses of its growing financial firepower, investing in the infrastructure and technology underpinning the AI boom while returning more cash to investors.

Disclosure: This article has been written by Podishetti Akash, who is not a SEBI-registered Research Analyst or an Investment Adviser. Podishetti Akash and his ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclosures here.
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