Nvidia Just Found $150 Billion Lying Around

Apparently, Nvidia has a lot of spare cash.

The AI chip giant just authorized an additional $150 billion to buy back its own stock.

Yes, billion with a B.

It’s the largest increase to a corporate share-buyback authorization ever — blowing past Apple’s previous $110 billion blockbuster from 2024.

And somehow, $150 billion isn't even the craziest number in this story.

After adding the new authorization, Nvidia now has roughly $235 billion available for share repurchases through fiscal 2028.

For perspective: Nvidia could theoretically spend more buying its own stock than the entire market value of many household-name companies.

So… why is Nvidia suddenly shopping for Nvidia?

The AI money machine

The answer starts with cash.

Lots of it.

The AI boom has transformed Nvidia from a company best known for gaming graphics cards into the company selling the essential hardware behind ChatGPT, data centers and the broader AI arms race.

Microsoft wants AI chips.

Meta wants AI chips.

Amazon wants AI chips.

Google wants AI chips.

And seemingly everyone building the next generation of AI infrastructure wants more computing power.

Nvidia has been standing near the center of that spending spree collecting checks.

The company finished its July quarter with about $22.4 billion in cash and cash equivalents, while revenue continues growing at a pace that would look ridiculous for a company a fraction of Nvidia's size.

Last month, Nvidia forecast roughly 70% revenue growth for fiscal 2028.

That's not 7%.

That's 70%.

Here's where things get interesting

You might assume Nvidia is buying back stock because its shares are outrageously expensive.

But relative to its expected profits, Nvidia's valuation has actually fallen dramatically.

The stock recently traded around 16.5 times expected earnings over the next 12 months.

That's Nvidia's lowest forward earnings multiple since 2015.

Its 15-year average?

About 30 times.

In other words, Nvidia's business has gotten enormously bigger while the price investors are paying for each dollar of expected earnings has gotten substantially smaller.

That doesn't automatically make Nvidia stock cheap — or mean the stock has to go higher.

But it certainly makes the timing of a record-breaking buyback interesting.

What happens when Nvidia buys Nvidia?

Share buybacks are basically corporate shrink rays.

A company takes cash and purchases shares of itself from the market. Those shares can then be retired or held as treasury stock.

That can leave fewer shares dividing up the company's profits.

Imagine a pizza cut into 10 slices.

Now imagine the same pizza divided among eight.

Each remaining slice represents a little more of the pie.

That's essentially the appeal.

Of course, buybacks only create value when the economics make sense. Spending billions buying overpriced shares can destroy shareholder value just as easily as buying attractive shares can enhance it.

And Nvidia hasn't promised to spend $235 billion tomorrow.

The authorization simply gives management the ability to repurchase up to that amount, with Nvidia expecting the program to run through fiscal 2028.

But $235 billion is still $235 billion

That's what makes this announcement remarkable.

Nvidia needs enormous amounts of money to keep pushing the AI arms race forward.

It needs new chips.

New technology.

New partnerships.

New infrastructure.

And after funding all of that, management believes the company can potentially devote hundreds of billions of dollars to buying back its own shares.

CEO Jensen Huang says Nvidia's cash generation gives the company enough firepower to continue investing aggressively in AI while returning capital to shareholders.

That's quite a flex.

A decade ago, Nvidia was primarily known to consumers as the company making graphics cards for gamers.

Today, it's discussing a stock-buyback program measured in hundreds of billions of dollars.

The headline number is $150 billion.

The number that really caught our attention is $235 billion.

Welcome to the AI boom.