Nvidia (NVDA) stock rose Monday after the chipmaker’s board authorized an additional $150 billion for share repurchases, the largest buyback increase on record. The move lifts Nvidia’s remaining authorization to $235 billion, which the company expects to use through fiscal 2028, a period that ends in late January 2028. It surpasses Apple’s $110 billion authorization from 2024. Shares gained roughly 2% to 3% in Monday trading even as the S&P 500, Nasdaq and Russell 2000 all traded lower.
What happened: Nvidia announced the increase before the market opened. CEO Jensen Huang tied the decision to the company’s cash generation, saying it gives Nvidia room to keep investing in AI technology while returning capital to shareholders. An authorization is permission, not a promise. Nvidia can buy as much or as little as it chooses and can pause the program at any time.
Why the pace matters: Spending $235 billion over about six quarters works out to roughly $39 billion per quarter. In the quarter ended July 26, Nvidia repurchased 94 million shares for $19.7 billion and paid $6.0 billion in dividends, a record return of about $26 billion. That was more than the $21.3 billion in free cash flow it generated. Nvidia ended the quarter with $56.6 billion in cash and marketable securities, and its quarterly dividend now stands at $0.25 per share. Using the full authorization on schedule would mean roughly doubling the recent buyback pace, which likely requires stronger cash flow or a bigger draw on that cash pile.
The valuation backdrop: The announcement arrives as Nvidia trades at its cheapest valuation in a decade, at about 16.5 times expected earnings over the next 12 months, the lowest since January 2015. That is despite guidance for $108 billion in revenue this quarter. The discount reflects real concerns. Gross margin is guided to 74% this quarter, and management has said it could slip to 71% to 72% in the fourth quarter as memory costs climb. Some of Nvidia’s biggest customers are also building their own chips. A buyback of this size signals that management believes the market is overstating those risks.
What it means for small caps: The macro backdrop is not friendly. The 10-year Treasury yield is hovering around 5.2%, its highest level since 2007, and the Fed raised rates on September 16. The Russell 2000 is still up about 14% this year, but it fell roughly 4% in September as borrowing costs climbed.
Nvidia’s buyback does not send a dollar to its suppliers. But the confidence behind it, including a $108 billion revenue outlook and more than $700 billion in expected hyperscaler capital spending this year, supports demand for the memory, optical, power and cooling companies that feed the AI buildout. The flip side is that the margin pressure squeezing Nvidia can hit smaller vendors harder, since they have less pricing power and pay more to borrow. Investors weighing smaller names in the AI supply chain will want to look closely at revenue quality and balance sheet strength.
