🚨 Nvidia announced the largest buyback in history ‼️

1/ 💰 What happened? Nvidia's board approved another $150 billion for share repurchases, bringing the total remaining program to $235 billion. The company plans to complete the entire program by fiscal 2028.

2/ ⚠️ Important detail The approval does not mean Nvidia will buy all the shares at once. The pace of repurchases will be determined by the company itself based on share price, cash needs, and investment plans.

3/ 📈 Where is the money coming from? The AI boom. Revenue for the second quarter jumped 106% year-over-year to $96.2 billion. Last month, the company also forecast about 70% revenue growth for fiscal 2028. And there is no shortage of customers: combined capital expenditures of major cloud players are expected to exceed $1.3 trillion by 2027, according to S&P Global.

4/ 🔍 Nvidia shares are trading at about 16.5 times earnings for the next 12 months. That is the lowest level since January 2015 and well below the 15-year average of around 30. The company is growing by more than 100% and the market values it cheaper than ten years ago.

5/ 🗣️ What did Jensen Huang say about it? According to the Nvidia CEO, the company is experiencing a platform shift that comes once in a generation. It has so much cash that it can invest in development while returning money to shareholders. The buyback, he said, reflects confidence in the long-term opportunity ahead.

My commentary

What caught my attention in this news was not the amount itself, but the combination of two numbers. A company growing 100% annually is trading at a P/E around 16. That is a low valuation for a major AI player.

At the same time, I would not take the buyback as an automatic signal to buy. First, it is only an approved limit, not a commitment. Second, Nvidia had $22.44 billion in cash at the end of the July quarter. The entire program will therefore be financed from future earnings, which depend on whether big tech companies continue to spend on AI at the same pace in two years. Third, part of buybacks in tech companies only offsets shares given to employees. The actual reduction in shares on the market is thus often smaller than headlines suggest.

What do you think about it? :)