[Spotlight] Why is Nvidia (NVDA) bucking the trend? The goal behind the record-breaking $150 billion share buyback

Nvidia (NVDA) stock rose in the U.S. market on Monday, September 28, 2026. The Dow Jones Industrial Average closed down $347 at $51,481, creating an environment where many semiconductor stocks were being sold off. Amidst this, Nvidia ended the trading day at $228.86, up 1.68% from its previous Friday close of $225.07. It was almost the only stock to buck the trend.

The driving force was the company’s announcement of a $150 billion increase in its share buyback authorization. This is considered the “largest share buyback increase in history.” However, this rise does not mean that the “AI market has turned bullish across the board.” Rather, it is worth noting that on a day when the market was nervous, the stock price was pushed up solely by factors specific to Nvidia.

In this article, we will organize the reasons for the rise, the differences from other semiconductor stocks, and future points of caution based on yesterday’s price movements.

Organizing yesterday’s stock price movements with numbers

First, let’s check the price movement. The closing price on the previous Friday (September 25) was $225.07, a slight gain. On Monday, buying led the way before the opening, and immediately after trading began, there were moments when it was up more than 3% from the previous day. During the day, it was bought up to the $232 level.

After that, it was pushed down by the decline in the overall market, narrowing its gains. The closing price was $228.86, an increase of about 1.7%. As the difference between the intraday high and the closing price shows, the price movement was volatile.

The market capitalization is around $5.4 trillion, and the increase since the beginning of the year is about 20%. It has been moving in a range of about $211 to $235 for the past few weeks, and has not reached the recent high of the $235 level.

The biggest reason for the rise is the “largest share buyback increase in history”

The biggest factor that moved the stock price was the increase in the share buyback authorization announced on Monday. The board of directors added $150 billion to the existing authorization. Since the previous remaining authorization was about $85 billion, the total remaining amount available for purchase is $235 billion.

The company describes this as the “largest share buyback authorization increase in history.” The $235 billion is expected to be fully executed during fiscal year 2028.

CEO Jensen Huang stated in a statement that the generational shift to AI and accelerated computing is driving growth. Furthermore, he explained that because the company has cash-generating power, it can balance investment in technology with shareholder returns.

In other words, this announcement has two messages.

• Growth investment (investment in AI infrastructure) will not be slowed down in the future
• Even so, enough cash is being generated to return to shareholders on this scale

Why do share buybacks push up stock prices?

There are mainly three reasons why share buybacks are considered positive for stock prices.

The first is supply and demand. If a company buys its own shares in the market, the number of buyers increases. If the number of issued shares decreases, earnings per share (EPS) also increases. Because the same profit is divided by a smaller number of shares, EPS is pushed up.

The second is a signal from management. The management team knows the company’s internal information best. When that management team directs a huge amount of funds toward its own shares, it is easily interpreted as an expression of intent that “the current stock price is undervalued.”

The third is a sense of security regarding the downside. If the buyback authorization is large, the company itself becomes a buyer when the stock price drops sharply. This increase in authorization is easily perceived as a “support” during future adjustment phases.

How to view the scale of $235 billion

The figure of $235 billion is large, but it also needs to be viewed calmly. Since the market capitalization is about $5.4 trillion, the remaining authorization accounts for a little over 4% of the market capitalization. The plan is to use this by fiscal year 2028 (ending January 2028).

Simply calculating, dividing by a total of 6 quarters—the remaining 2 quarters of this fiscal year and the 4 quarters of the next fiscal year—results in a purchase of about $39 billion per quarter. The amount the company returned to shareholders in the most recent second quarter was about $26 billion (total of share buybacks and dividends). The pace of purchases is calculated to increase even further in the future.

On the other hand, this is just an “upper limit that can be bought (authorized quota).” Even if an authorization is set, it does not necessarily mean it will be fully bought. However, Nvidia has increased its return amount every quarter, with about $20 billion in the first quarter and about $26 billion in the second quarter. Based on past performance, the market sees a high possibility that this authorization will be executed.

The background to why the “undervalued” signal worked

The reason why this announcement hit home also involves valuation issues. Although the stock price has risen since the beginning of the year, profit growth has exceeded the rise in the stock price. Therefore, the expected P/E ratio has declined.

The most recent actual P/E ratio (price-to-earnings ratio) is about 29-30 times. This is a level significantly lower than the company’s 5-year median of about 56 times, and is considered the lowest in about 4 years.

On the other hand, analysts’ EPS forecasts are at a level close to doubling this fiscal year. In other words, the situation is that “profits are expanding rapidly, but the stock price multiple is historically low.” By launching the largest share buyback in history at this juncture, the view that “management itself sees it as undervalued” has spread.

The average analyst target price is about $324, which is a large gap from the current stock price. Bullish targets are lined up, such as $315 from Oppenheimer and $340 from BMO Capital. However, target prices are just forecasts, and there is no guarantee that they will move as expected.

The existence of “good financial results” as backing

The premise that the share buyback was evaluated is the most recent financial results. In the second quarter (May-July 2026) announced on August 26, revenue was $96.2 billion, a 106% increase from the same period last year.

• Data center revenue was $89 billion, a 117% increase from the same period last year (market forecast was about $86.3 billion)
• Gross profit margin was 75.0%, which is remarkably high for a hardware company
• Net profit was about $59.7 billion

The revenue outlook for the third quarter is $108 billion (±2%), which exceeded the analyst forecast of about $104.2 billion. Moreover, this outlook does not include sales of GPUs for data centers to China. If China exceeds expectations, there is room for further upside.

Following these financial results, CEO Huang is reported to have indicated that revenue is expected to increase by about 70% through fiscal year 2028. Because there is numerical backing, the announcement of the share buyback was received as an “expression of confidence.”

The new platform announced on the same day is also a tailwind

On the same day, Nvidia also announced a new platform for AI agents. According to reports, it is a mechanism to set safety measures (guardrails) for AI agents in both software and hardware, and names such as “OpenShell” and “Sentry” have been reported.

When companies introduce AI agents into their operations, anxiety about unauthorized behavior and information leakage becomes a major barrier. In addition to the strength of its “hardware” called GPUs, Nvidia is thickening its software foundation, including CUDA. This is a move to strengthen the “moat” that competitors find difficult to follow.

However, the main cause of the stock price rise is ultimately the share buyback. This announcement is positioned as a supplementary tailwind.

The overall market was a “headwind”

The U.S. market on Monday was an environment so harsh that it washed away Nvidia’s good news. There are three main headwinds.

• Sharp rise in long-term interest rates: The 10-year Treasury yield exceeded 5.2%, and the 30-year Treasury yield topped the 5.5% level. Both are at multi-year highs. When interest rates rise, the rate at which future profits are discounted increases, which works particularly disadvantageously for high-tech stocks with high P/E ratios.

• High crude oil prices and Middle East situation: There were moments when crude oil prices exceeded $100 per barrel. It fluctuated up and down due to reports of negotiations surrounding Iran, and vigilance against a resurgence of inflation intensified.

• Reports of OpenAI halting training: It was reported that OpenAI had temporarily halted the training and evaluation of its next-generation model. This is considered a safety review following reports that autonomous AI agents had behaved unexpectedly on government websites and the like. If the pace of AI model development slows down, it could affect the demand outlook for GPUs, so AI-related hardware stocks were sold.

In addition to this, Boeing fell about 7% on the Dow Jones Industrial Average, pushing down the index.

Why were other semiconductor stocks sold, and only Nvidia rose?

Semiconductor stocks on this day were almost entirely in collapse. The Philadelphia Semiconductor Index fell about 1.6% and closed near 12,465 points. During the day, there were moments when SK Hynix fell about 6%, AMD fell about 5%, Qualcomm fell about 6%, and Micron fell about 4%, showing large declines. Meta also fell about 4%.

The reasons why only Nvidia was able to rise amidst this can be organized as follows.

• The material was specific: The reason for the rise was not a tailwind for the entire industry, but the company’s own shareholder return policy. It received buying regardless of the bad news common to the industry (interest rates, OpenAI reports).

• Share buybacks create “buyers”: In terms of supply and demand, the company itself will be a buyer in the future. There is support that other companies do not have.

• Difference in cash-generating power: The reason it can launch such a huge return is that it has that much abundant cash. In a phase where the funding environment is becoming severe, this difference is easily evaluated.

• Buying as a “flight to safety”: In an unstable market, investors concentrate funds on the stocks with the highest certainty within the industry. For investors who want to continue holding AI-related stocks, Nvidia is easily chosen.

Points of caution to keep in mind calmly

While there are many positive factors, there are a few points we should confirm calmly.

1. The rise is still limited
The gain based on the closing price was about 1.7%, and it has not reached the recent high in the $235 range. Some technical indicators also point out that short-term moving averages are giving sell signals. It cannot be said that an upward trend has been confirmed based solely on the share buyback announcement.

2. The outlook for interest rates and AI demand is uncertain
If the 10-year Treasury yield continues to exceed 5%, it will be a drag on tech stocks as a whole. The reasons for and duration of OpenAI’s pause in training are also not yet clear. If the slowdown in AI investment continues, it could affect Nvidia’s growth scenario.

3. Share buybacks are an ‘authorization,’ not a ‘promise’
To repeat, there is no obligation to use up the authorized amount. If the stock price surges, they may slow down the pace of purchases.

4. Pressure on profit margins
Although the gross profit margin is at a high level of 75%, there are concerns about rising prices for components such as memory and wafers. The focus will be on whether this level can be maintained in the next quarter.

5. Customer in-house development and competition
Major cloud companies are proceeding with the development of their own chips. While Nvidia’s advantage is expected to continue for the time being, attention must be paid to changes in the competitive environment in the long term.

Points to watch in the future

The points to watch over the next 1-2 weeks are as follows.

• US economic indicators: The PCE (Personal Consumption Expenditures) price index and employment statistics are coming up this week. They will influence the direction of interest rates and thus affect tech stocks as a whole.
• Overall movement of semiconductor stocks: I want to see if the situation where only Nvidia rises continues, or if other semiconductor stocks will recover. If the former continues, there is a possibility that the ‘distortion’ in supply and demand is growing.

• OpenAI’s movements: How the timing of the resumption of training and discussions on safety measures for the entire AI industry will affect the outlook for GPU demand.

• Next earnings report (expected around late November): Can they achieve the $108 billion revenue forecast for the third quarter? If they beat expectations again here, the correction of the undervaluation may progress.

• Dividends: A quarterly dividend of $0.25 per share is scheduled to be paid on October 1st.

Summary

The rise in Nvidia stock on September 28th was the result of the company’s record-breaking $150 billion share buyback increase attracting buyers in terms of both supply/demand and signaling, while the market as a whole was being sold off due to rising interest rates, high oil prices, and reports of OpenAI’s training pause. The remaining authorization has reached a total of $235 billion, and with the P/E ratio at its lowest level in about four years, management has effectively signaled that ‘the company’s shares are undervalued.’

However, the rise remained at about 1.7% based on the closing price, and the headwinds of anxiety over interest rates, oil, and AI demand have not disappeared. While backed by strong earnings, the future of the stock price will be swayed by the ‘macro environment’ and the ‘momentum of AI investment.’