Nvidia adds $150 billion to stock buyback, a record increase
Nvidia's board approved an extra $150 billion for buying back its own shares, raising its total authorization to about $235 billion. The company called it the largest buyback increase in history. Buybacks reduce the number of shares and can lift the stock price.
Nvidia is plowing a huge amount of its cash back into its own stock. The chipmaker's board approved an additional $150 billion for share repurchases on Sept. 28, bringing its total remaining authorization to about $235 billion, the company said. CNBC reported that Nvidia called it the largest buyback increase in history.
Nvidia said it expects to complete the program through fiscal 2028.
A buyback is when a company uses its money to purchase its own shares on the open market. That reduces the number of shares, which can raise earnings per share and support the stock price. Critics argue the money could be better spent on research, workers or new projects.
Nvidia can afford it. The company makes the graphics chips that power most AI data centers, and demand has been enormous. Its sales and profits have soared since late 2022, when ChatGPT set off the AI boom. Nvidia has become one of the world's most valuable companies.
CNBC's Jim Cramer said the record buyback could "change the trajectory" of the stock.
Here is the background. Nvidia was founded in 1993 to make graphics chips for video games. Its chips turned out to be ideal for the math behind AI, which helped it grow from a gaming company into a pillar of the tech economy.
Not everyone is cheering. Some investors worry the AI spending boom could slow if companies cannot earn enough from AI to justify the cost of chips and data centers. Others point to rising competition from custom chips made by Google, Amazon and others.
Nvidia stock is widely held in retirement accounts and index funds, so its moves affect many households.
The company's next earnings report is due in November.
What we know: Nvidia added $150 billion to its buyback, for a total of about $235 billion.
What we don't: How fast it will buy shares, and whether AI demand stays strong.
Where outlets agree Nvidia's newsroom and CNBC both report a $150 billion buyback increase that lifts the total authorization to about $235 billion.
Where they differ Supporters say the buyback shows confidence and rewards shareholders, while critics say the money could go to research or workers instead.