Nvidia Will Buy Back $235 Billion of Its Stock by January 2028. Does That Make the Stock a Buy?
Nvidia has a good problem on its hands: what to do with all this excess capital.
Nvidia, a leading company in artificial intelligence data centers, has seen its revenue soar due to the growing demand for its graphics processing units (GPUs). As of its latest quarter, Nvidia's data center sales are projected to reach $356 billion, up from $11 billion in fiscal 2022. This significant increase has generated a substantial amount of free cash flow for the company.
Nvidia is known for its capital-light business model, which allows it to generate large amounts of free cash flow relative to its size. The company has already been returning a significant portion of this cash to shareholders through dividends and buybacks. However, the board has recently authorized the largest share repurchase program in history, adding an additional $150 billion to Nvidia's remaining authorization.
Management has now set a total buyback authorization of $235 billion, with the plan to deploy the entire amount by the end of January 2028. Investors are left to question whether this substantial buyback program makes Nvidia's stock a good investment.
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