Updated: 5 - Driven by the artificial intelligence boom, Nvidia expands stock buyback to a record $150 billions

Stock price data updated in paragraph 2, analyst comments added in paragraphs 8-9, and details provided in paragraph 12.

Anhata Rooprai

Reuters, September 28 - NVIDIA NVDA.O has raised its share repurchase authorization by a record $150 billion, surpassing Apple AAPL.O 's approved $110 billion (link) buyback program in 2024, at a time when the chip giant's stock is trading near its lowest price-to-earnings ratio in more than a decade.

NVIDIA, based in Santa Clara, California, saw its shares rise nearly 2%. As of Friday's close, the stock is up over 20% year-to-date.

This additional authorization brings NVIDIA's remaining stock buyback capacity to $235 billion. The company expects to exhaust these funds by fiscal 2028, as surging demand for AI training and inference is fueling growth in its cash flow.

According to LSEG, NVIDIA shares are currently trading at about 16.5 times their 12-month forward price-to-earnings ratio, the lowest since January 2015 and well below the 15-year average of 30. Some analysts believe this signals that market expectations for profit growth are slowing.

This announcement comes as (link) buyback activity is slowing, with repurchase volumes dropping by about 50% between July and September 23.

"Our cash flow allows us to invest in technology that drives this transformation and return capital to shareholders," CEO Jensen Huang said in a statement.

According to data compiled by LSEG, NVIDIA's $150 billion buyback increment exceeds the market capitalization of around 84% of the companies in the S&P 500 index.

eMarketer analyst Jacob Bourne said: "The pace of AI infrastructure build-out will not continue forever at current speeds, but NVIDIA is signaling confidence that demand for its hardware and services has staying power."

"The company's current cash-generating ability is strong enough for it to believe it can both continue to invest heavily in its business and return capital to shareholders," he added.

At the end of the July quarter, NVIDIA held $22.44 billion in cash and cash equivalents. The company most recently announced an $80 billion stock buyback program in May (link).

Last month, the company forecast that fiscal 2028 revenue would grow by about 70% (link), which reassured investors who questioned how long the AI spending boom could last after several years of explosive growth.

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