New Delhi: Nvidia’s board has approved another $150 billion of stock repurchase of the company’s existing share repurchase program, which brings the remaining stock repurchase authorization to $235 billion. It’s the largest buyback authorization the company has made in its history, the company said.
Nvidia expects to complete the rest of the program by FY28. The timeline continues to go until January 2028. This is higher than the previous record for an American business, authorized by Apple in 2024 with their $110 billion.
Investors responded positively. In Monday’s trading, shares were 2.8% higher and are 1.7% higher in premarket trading. The shares are up 24% in the last year and the company’s market capital is worth $5.42 trillion.
The move was linked to a rise in demand for AI by Chief Executive Jensen Huang. The company has expanded due to a “once in a generation platform shift” to accelerated computing and AI, he said. He said the authorization is a testament to Nvidia’s confidence in the opportunity down the road.
The move is being attributed to two factors. One of this is Nvidia’s fast revenue growth. The other is the hefty gains on its stock of start-up acquisitions. The company has revealed its investments in 13 public companies and 229 private ventures, adding that it’s repaid three or more times the investment made in ventures via exits. Nvidia will also be increasing its dividend, albeit not yet specifying the amount and timing.
Analysts say that the company is spending its money from growth, not slowdown. The buybacks come as a move from a mature company whose growth has been stunted, but Nvidia continue to grow at a fast pace with free cash flow expected to be $329 billion by fiscal 2028. The company hasn’t said if the repurchased shares will be retired.
The industrial backdrop continues to be favorable. In August, S&P Global Ratings estimated that the combined spending of the top cloud providers will exceed $1.3 trillion on capital expenditure by 2027, as they continue to deploy artificial intelligence data centers. Earlier this month, Huang has announced a plan to double Nvidia’s chip sales in 2027.
Nvidia has been engaged in buybacks for several years. It notes in its FY25 filing that it repurchased 310 million shares for a total of $34.0 billion during the previous year, partly to counter dilution from employee share issuance. The new authorization is many times bigger than any previous authorization.
