Nvidia's $150B Buyback Expansion Signals Management Confidence in AI Cash Flow

Key points

• Nvidia's board approved a $150 billion increase to its share repurchase program, raising the total remaining authorization to $235 billion.
• The company plans to execute the entire buyback program through fiscal 2028, which begins in February 2026.
• Nvidia's fiscal 2028 price-to-earnings ratio is 14.5, lower than all major tech peers except Micron, and well below its five-year average of 62.9.
• Analysts expect Nvidia's net income to reach approximately $385 billion in fiscal 2028, representing a 60% increase from the prior year.
• The stock rose nearly 2% on the announcement but reversed intraday, remaining the most actively traded stock on the market.

Background

Nvidia previously announced an $80 billion repurchase plan in May 2026 and increased its quarterly dividend to 25 cents per share. The company has historically aimed to return about half of its free cash flow to investors. This latest move follows a period of strong revenue growth, with Nvidia projecting 70% sales growth in fiscal 2028.

How outlets are covering it

CNBC emphasizes the valuation gap, noting that Nvidia's earnings are scaling faster than its share price, which has led to a compressed multiple compared to peers like Apple and Microsoft. Karan Ramchandani of Post Oak Group views the buyback as a 'healthy mark' of a company investing in itself. Conversely, Gene Munster of Deepwater Asset Management suggests investor anxiety about slowing growth rates is driving the low valuation. Ben Reitzes of Melius Research argues the buyback will help correct the valuation. Nvidia's own press release frames the move as a reflection of confidence in the 'once-in-a-generation' AI platform shift, while Benzinga notes the stock's intraday reversal despite the news.

Why it matters

The buyback signals that Nvidia's management believes its stock is undervalued relative to its earnings trajectory. It also highlights the tension between the company's massive cash generation from AI demand and market concerns about the sustainability of such high growth rates. The move could reduce the share count by 4% if fully executed, potentially boosting earnings per share.

What to watch

Nvidia expects to execute the $235 billion buyback program through fiscal 2028. The company will also continue to invest in new AI technologies, including the recently announced open agent safety platform. Investors will watch how the buyback impacts the stock's valuation and whether the company can sustain its projected 70% sales growth.