Nvidia announces the largest stock buyback increase in history

Nvidia (NVDA +0.63%) has crushed broader equities over the past five years thanks to its position in the artificial intelligence (AI) industry. There are plenty of debates on Wall Street over whether the semiconductor specialist can maintain its momentum, with some bears fearing that AI spending may eventually slow, Nvidia’s revenue and earnings growth rates will plummet, and its share price will follow. The bulls have a different view, and recent developments arguably provide them with more reasons — 150 billion, to be exact — to remain bullish on the stock. Here’s what investors should know.

Nvidia announces the largest stock buyback increase in history

Share buybacks are nothing new for Nvidia, but the company has ramped things up significantly this year. At the end of its fiscal 2027 first quarter (which closed on April 26), Nvidia had $38.5 billion remaining under its share repurchase authorization. And in May, the tech leader announced an $80 billion increase to its share repurchase program. Nvidia recently one-upped itself. On Sept. 28, the company announced an additional $150 billion increase to the program — which Nvidia called the largest share repurchase authorization increase in history — bringing the total remaining to $235 billion.

There is a lot to unpack here, but let’s focus on three important takeaways. First, share buybacks can be an excellent capital allocation strategy, particularly when the stock is trading at an attractive valuation. Fewer shares outstanding mean each shareholder owns more of the company and has a greater claim on earnings (share buybacks boost earnings per share).

So, for those who think Nvidia’s shares are currently undervalued, this is great news. Second, Nvidia is increasingly willing to return capital to shareholders. In addition to its recent share buyback announcements, the company significantly increased its dividend in May — by 2,400%, to be exact — bringing the quarterly per-share amount to $0.25.

That’s not a huge dividend per share, and the company’s forward yield of 0.4% is also pretty low — the S&P 500‘s average is 1.1%.

Still, what we are seeing is a company that is increasingly willing — and able — to return capital to its shareholders. And that brings us to our third point: Nvidia is generating significant cash, which is allowing the company to afford its higher dividend and increasingly large share repurchase program. Over the past five years, Nvidia’s trailing-12-month free cash flow has increased by 1,670%, an incredible achievement for a company of this size.

The AI tailwind could last a while longer

Nvidia has had a fairly volatile year as Wall Street debates whether the semiconductor company can maintain its recent momentum. But in my view, the evidence that the company still has ample upside continues to mount. Consider Nvidia’s latest quarterly update, for the second quarter of its fiscal year 2027, which ended on July 26. Nvidia’s revenue increased by 106% year over year to $96.2 billion.

The company’s non-GAAP operating income grew faster, by 124% year over year, to almost $64 billion. Nvidia’s non-GAAP net income came in at nearly $54 billion, up 118% from the year-ago period. The tech giant’s update was so impressive that its shares jumped post-earnings, quite an accomplishment for a company that always has high market expectations.

Meanwhile, many corporations, including hyperscalers (large cloud computing providers), continue to spend large sums on AI infrastructure. Further, although some still think of Nvidia as a GPU (graphics processing unit) company, it has significantly expanded its product portfolio. It now offers a complete AI platform that helps companies train, deploy, and run advanced AI models.

There is a significant opportunity in some of the niches it targets. For instance, the agentic AI boom will likely lead to increased demand for CPUs (central processing units), and to that end, Nvidia launched its Vera CPU. There is arguably still a large addressable market for Nvidia, and the stock doesn’t seem too expensive. Nvidia is trading at 25x forward earnings, versus an average of 20.9x for information technology stocks.

Considering how fast the company’s revenue and earnings are growing, and the massive opportunities ahead, Nvidia is worth a hefty premium. The bottom line: It is still time to invest in the stock, and the $150 billion increase in share buyback authorization is just one of many reasons to do so.