Nvidia (NVDA) just gave its investors a $150 billion reason to pay attention.
The AI chip giant authorized an additional $150 billion in stock buybacks on Sept. 28, signaling major confidence that its business can continue funding expansion while returning substantial cash to shareholders.
The move comes at a time when AI stock investors are firmly in “show-me” mode, with tech stock valuations hinging heavily on how long the AI spending boom can last.
Nvidia has delivered exceptional growth, with quarterly sales more than doubling from a year earlier. Now, management is expanding its capacity to repurchase the shares investors are debating how to value them.
Yet despite the appeal being straightforward, the headline dollar figure tells only part of the story.
How quickly Nvidia spends that money, what it pays, and how much cash its business produces will determine how meaningful this confidence signal ultimately becomes.
Nvidia’s $150 billion move puts its cash engine to the test
Nvidia is looking to sharply expand its capacity to reward its shareholders, authorizing another $150 billion in buybacks while lifting its remaining repurchase allowance to $235 billion, as reported by Reuters.
Management expects to execute the remaining program through fiscal 2028, which makes the move a substantial statement about future capital returns, although purchases have yet to happen.
More Nvidia:
Nvidia just made a move Wall Street wasn’t ready for
Nvidia just locked down deal that changes AI race
Nvidia stock is doing something it hasn’t done in years
“This authorization reflects our confidence in the long-term opportunity ahead,” CEO Jensen Huang said.
The scale shows how far Nvidia has come. Its original buyback program, announced Aug. 9, 2004, authorized just $300 million. The latest increase alone is 500 times that amount.
More recently, Nvidia approved a massive $80 billion increase in May. It also repurchased $39.8 billion of shares during the first half of fiscal 2027, up roughly 64% from $24.2 billion a year earlier.
That tremendous execution history gives the new announcement added credibility.
Its operating performance helps explain management’s confidence. Q2 sales surged 106% to $96.2 billion, with Data Center sales jumping 117% to $89 billion. Adjusted earnings reached $2.22 per share, up 120%, while gross margin stood at 75%.
Nvidia’s next-quarter sales forecast of $108 billion, plus or minus 2%, implies another roughly 12% sequential increase at the midpoint. That outlook assumes no Data Center compute revenue from China.
Still, investors should put the buyback in perspective.
Against an approximately $5.5 trillion market value, the additional authorization represents about 2.7%; the full remaining program equals roughly 4.3%.
Moreover, actual purchases can increase remaining shareholders’ ownership and support earnings per share. However, their value depends on the prices Nvidia pays, offsetting share issuance and subsequent business performance.
Cash generation deserves equally close attention.
First-half free cash flow rose to $69.9 billion from $39.6 billion. However, quarterly free cash flow fell from $48.6 billion in Q1 to $21.3 billion in Q2, as receivables and inventory absorbed substantial cash.
Nvidia also issued $25 billion of senior unsecured notes in June for general corporate purposes, Reuters noted. That does not establish that this buyback is debt-funded, but it complicates any claim that shareholder returns come entirely from surplus operating cash.
Nvidia’s buyback strengthens the case, but price discipline matters
Nvidia’s expanded buyback program supports the investment thesis, but investors need to anchor purchases to earnings durability and valuation.
At its Sept. 25 close of $225.07, Nvidia traded at approximately 18.7 times forward earnings and 28.5 times trailing profits, according to Stock Analysis. The gap reflects expectations for substantial earnings growth already embedded in the forward multiple.
That looks appealing alongside Nvidia’s rapid expansion. However, a low forward multiple offers limited protection if forecasts disappoint. Moreover, cutting expected earnings by 20% would lift that multiple to roughly 23.4 at an unchanged share price.
From a technical standpoint, through Sept. 25, Nvidia traded above its 50-day moving average of $215.98 and its 200-day moving average of $199.47. These averages smooth daily price swings; trading above both suggests that the intermediate and longer-term trends remain favorable.
Its 14-day relative strength index stood at 55.17. This momentum gauge runs from zero to 100, with readings above 70 commonly considered overbought.
Around 55, buying momentum is moderately positive, though it hasn’t reached that threshold. Neither indicator guarantees further gains.
For new investors, staged purchases can reduce the risk of committing everything after a headline-driven jump. A pullback toward $216 deserves attention if earnings expectations remain intact. That moving average is a reference point, not a guaranteed floor.
Existing shareholders should watch actual repurchases, the diluted share count, and cash conversion. An authorization creates capacity; execution determines the benefit.
A sustained break below the 50-day average alongside weaker guidance would warrant reassessment. Continued earnings upgrades and improving cash generation would strengthen the case for holding through volatility.
Related: Bank of America doubles down on Micron stock before earnings