Jim Cramer says Nvidia’s record buyback could ‘change the trajectory’ of the stock
Nvidia's $150 billion worth of additional buyback firepower is a major step in the right direction.
Nvidia, the leading chipmaker, has approved the largest share buyback program in the history of the stock market. The company's CEO, Jensen Huang, announced on Monday that it has increased its existing share repurchases by $150 billion, raising the value of approved repurchases to $235 billion. This makes Nvidia the world's most valuable company, surpassing Apple's previous record of $110 billion in 2024.
Huang stated that Nvidia is experiencing an unprecedented infrastructure build-out and is generating significant cash, which will be returned to shareholders through the buyback. The company expects to complete the buyback by the 2028 financial year. Share repurchases involve using cash to buy back company shares, reducing the number of outstanding shares and potentially increasing the stock price.
This strategy can also offset share issuance as a form of employee compensation. Warren Buffett, a renowned investor, has previously suggested that buybacks make sense only when a stock is trading below its intrinsic value, indicating that management believes the company is undervalued. Nvidia's stock price has been on a strong upward trend, up around 2.2% in premarket trading on Monday, 21% for the year, and an impressive 1,000% over the past five years.
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