NVIDIA Announces Additional $160 Billion Share Buyback: Confidence in the AI Boom and What It Means for Us
These days, there isn’t a day that goes by where we don’t hear about AI, whether at work or in our daily lives.
NVIDIA, which is at the center of this AI boom, has announced an additional share buyback of approximately 24 trillion yen.
“What is a share buyback?” and “Does such a huge amount of money have anything to do with us?”
Today, I will break down this news into everyday language.😊
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💰 What is the approximately 24 trillion yen being used for?
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What NVIDIA has increased is the authorization available for share buybacks.
The additional authorization is $150 billion, or about 24 trillion yen. Combined with the previously unused portion, the total authorization available for future buybacks will be $235 billion, or about 37 trillion yen.
In other words, they haven’t already spent 24 trillion yen on purchases.
This is an announcement stating, “From now on, we will be able to buy back up to this amount.”
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📌 Why are share buybacks considered a return to shareholders?
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A share buyback is when a company repurchases its own stock from the market.
Those who sold their shares receive the proceeds.
So, what does this mean for those who held onto their shares without selling?
For example, suppose a company’s profits were divided among 100 shares.
If the repurchased shares are retired, reducing the total to 90, the number of shares sharing the same profit decreases.
As a result, the share of profit per share increases.
This is why share buybacks are called “returning value to shareholders”😊
However, announcing a share buyback does not necessarily mean the stock price will rise.
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🤔 Why set such a large limit now?
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NVIDIA explains that the money generated from its AI semiconductor business can be used for both future technology investments and returns to shareholders.
Continuing to grow the business while also returning money to shareholders.
From this announcement, we can also feel their confidence in the future that “AI demand will continue for a long time.”
Of course, future growth is not guaranteed. It is important to see if demand and profits continue to grow from here on out.
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🤖 New Announcements on AI Safety Measures
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On the same day, NVIDIA also announced a platform regarding AI safety measures.
As AI is increasingly used to perform tasks on behalf of humans, the risk of it acting beyond its instructed scope is being debated.
This new platform is designed to set boundaries on what AI can do, monitor its actions, and stop it if it attempts to exceed those limits.
It shows their aim to take the lead not only in semiconductors but also in the field of safe AI usage.
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📉 NVIDIA stock rises, but the overall U.S. market falls
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On September 28, NVIDIA stock rose by nearly 4% at one point.
The closing price was $228.86, up 1.68% from the previous day.
However, all three major U.S. indices fell.
This is because concerns over the Middle East situation pushed up oil prices, spreading caution regarding inflation and interest rates.
Even if there is good news for NVIDIA, the market as a whole faces different anxieties.
The stock price of a single company does not necessarily move in the same way as the stock market as a whole.
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🏠 What about our daily lives and asset building?
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Even if you do not buy NVIDIA stock directly, those who hold U.S. or global stock investment trusts through programs like the new NISA may be indirectly invested in NVIDIA.
However, investment trusts include other companies as well. Just because NVIDIA goes up, it does not mean your investment trust will rise by the same amount.
In terms of household finances, we should also keep an eye on the movement of crude oil prices.
If crude oil prices remain high, it could impact our living expenses through gasoline prices and logistics costs.
As a financial planner, I believe it is important to look at both news about notable companies and the movements of the overall market and household finances.🌱
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🇺🇸🇨🇳 Follow-up on US-China Tariffs
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There has also been a development regarding the US and Chinese tariffs that I mentioned yesterday.
Both countries have announced lists of items that are candidates for tariff reductions.
For the US, the items imported from China include 77 categories such as toys.
For China, the items imported from the US include 1,619 categories such as agricultural products and medical equipment.
If tariffs between the world’s top two nations actually decrease, it is expected that trade stagnation will ease. It will be interesting to see if this becomes a tailwind for Japanese exporters and Japanese stocks as well.
However, this is currently just the announcement stage of the candidates. We will continue to monitor when and by how much they will be reduced.
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📊 Today’s Market
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*Previous day’s closing price
💵 USD/JPY: 157.41 yen
📊 Nikkei 225 Futures: 65,877.62 (-486.58)
🏛️ NY Dow: 51,481.51 (-347.11 ▼0.67%)
💻 Nasdaq: 26,820.38 (-248.33 ▼0.92%)
📈 S&P 500: 7,683.69 (-59.72 ▼0.77%)
🇺🇸 US 10-Year Treasury Yield: 5.236% (+0.076)
🇯🇵 Japan 10-Year Treasury Yield: 3.085% (+0.015)
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