š„ Nvidia Has $235B to Spend ā But Can It Buy Growth Too?
$NVIDIA(NVDA)$ just put $235 billion behind its own stock.
That sounds like an enormous vote of confidence.
On September 28, Nvidiaās board added another $150 billion to its share-repurchase authorization, taking the remaining authorization to $235 billion through fiscal 2028. Nvidia described it as the largest increase to a buyback authorization in history. ļæ¼
Then came the market reaction.
Nvidia hit an intraday record of $237.88 on Friday before closing at $233.95, up 1.34%. Its market value finished around $5.7 trillion. ļæ¼
But hereās the question I keep coming back to:
At these prices, is buying back stock the best use of Nvidiaās enormous cash flow?
The bull case is straightforward.
Buybacks reduce the number of shares outstanding, potentially increasing earnings per share. They also signal that management believes the company can generate enough cash to return billions to shareholders while continuing to invest heavily in AI.
And Nvidia isnāt short of cash generation.
But thereās another side.
A buyback can improve the per-share numbers without changing the underlying demand for Nvidiaās products.
It doesnāt guarantee another surge in data-centre orders.
It doesnāt eliminate competition.
And it certainly doesnāt make future growth happen.
Thatās particularly important when Nvidia is already trading at record levels.
The stock has now climbed back to its highs, while AMD has also surged and Broadcom continues to benefit from the expanding AI infrastructure market.
So I donāt think the key question is:
āIs Nvidiaās $235B buyback bullish?ā
It clearly can be supportive.
The better question is:
āCan Nvidia grow its earnings fast enough that todayās record price still looks reasonable two years from now?ā
Thatās the real test.
If AI infrastructure spending keeps accelerating, the buyback could become an additional tailwind on top of extraordinary earnings growth.
But if growth eventually slows, $235 billion of repurchases wonāt magically create new demand.
Buybacks can support a stock. They canāt replace growth.
Thatās why Iām watching Nvidiaās next earnings growth numbers more closely than the size of the buyback.
Not financial advice. Do your own research and consider your own risk tolerance before making investment decisions.
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