Nvidia’s $150 Billion Buyback Explained: Why NVDA Rose on a Red Market Day

Nvidia did something on September 28 that almost no company in market history has been able to do: it announced a $150 billion increase to its share-repurchase authorization while continuing to spend aggressively on artificial intelligence infrastructure and product development.

The new authorization lifts Nvidia’s total remaining buyback capacity to $235 billion, which the company expects to use through fiscal 2028.

The announcement stood out because the broader market was weak. The S&P 500 fell 0.77% and the Nasdaq dropped 0.92% as oil prices and Treasury yields rose. Nvidia, by contrast, gained about 1.6%.

That divergence immediately created a simple investor question: why is Nvidia spending so much money buying its own shares when the AI buildout still requires enormous capital?

The answer is not simply that management wants to support the stock price. The size of the authorization reflects a much larger change in Nvidia’s financial profile.

Nvidia is now generating enough cash that it can fund product development, ecosystem expansion and shareholder returns at the same time.

The harder question is whether that cash generation will remain strong enough to justify a repurchase program that is larger than the market capitalization of most S&P 500 companies.

What Nvidia Actually Announced

Nvidia’s board authorized an additional $150 billion for share repurchases.

That raises the amount remaining under the program to $235 billion.

The company plans to execute the program through fiscal 2028.

This is an authorization, not a legal obligation to spend the entire amount immediately. Nvidia can change the pace of repurchases depending on cash generation, market conditions and investment needs.

That distinction matters because investors sometimes treat a buyback authorization as if the shares have already been purchased.

They have not.

The financial effect depends on how quickly Nvidia actually uses the authorization and at what share prices.

Why the Size Is So Unusual

The $150 billion increase is larger than Apple’s widely discussed $110 billion authorization from 2024 and has been described by Nvidia as the largest increase in a share-repurchase authorization in history.

The remaining $235 billion program is enormous even for a company with Nvidia’s market value.

The scale tells investors two things.

First, management expects the company to continue producing extraordinary cash flow.

Second, management believes returning capital is appropriate even while the AI market remains in an aggressive investment phase.

That is a different financial stage from Nvidia’s earlier years, when nearly every dollar of incremental value was associated with reinvestment and growth.

The Buyback Arrives as Nvidia’s Valuation Has Compressed

According to LSEG data cited by Reuters, Nvidia was trading around 16.5 times 12-month forward earnings, its lowest multiple since January 2015 and well below its 15-year average near 30 times.

That is striking because the company is still forecasting extremely strong growth.

Nvidia recently projected roughly 70% revenue growth for fiscal 2028.

A company growing that quickly would normally command a much higher earnings multiple.

The lower valuation shows that investors are not questioning current AI demand as much as they are questioning how long the growth rate can last.

The buyback is therefore a statement about duration.

Management is effectively signaling that it believes the market is underestimating the longevity of Nvidia’s earnings power.

Why NVDA Has Lagged Some Chip Peers

Nvidia remains the largest and most profitable company in AI accelerators, but its 2026 stock performance has not been as dominant as its business performance.

Through the end of last week, Nvidia was up a little more than 20% for the year.

AMD had more than doubled.

Intel had more than tripled.

That does not mean AMD or Intel have overtaken Nvidia in AI economics.

It means investor expectations were already extraordinarily high for Nvidia.

A company can produce excellent results and still lag if the market had already priced in even more.

The new buyback gives Nvidia another way to increase per-share value when revenue growth naturally becomes harder to accelerate from such a large base.

How Buybacks Affect Earnings Per Share

A share repurchase reduces the number of shares outstanding if the company buys back more stock than it issues through employee compensation and other programs.

With fewer shares, the same amount of net income is divided across a smaller denominator.

That raises earnings per share.

The important point is that buybacks do not create operating profit.

They change how much of that profit belongs to each remaining share.

For a company with Nvidia’s cash generation, repurchases can become a meaningful second engine of EPS growth once revenue growth eventually moderates.

That is one reason investors compare Nvidia’s emerging capital-return strategy with Apple’s.

The Main Bull Case

The strongest interpretation is straightforward.

Nvidia can keep investing heavily in GPUs, networking, software and AI platforms while still producing more cash than it needs for internal investment.

If AI infrastructure demand remains strong, the company can use that excess cash to retire shares at a valuation that management considers attractive.

That combination can create powerful per-share compounding.

The business grows, margins remain strong, the share count declines, and EPS grows faster than total net income.

In that scenario, the buyback is not defensive.

It is a sign of financial strength.

The Main Risk

The risk is that the buyback is being authorized near a cyclical peak in AI spending.

Technology companies are committing hundreds of billions of dollars to data centers, power and AI infrastructure.

Investors are increasingly asking whether those projects will generate enough revenue to justify the spending.

If hyperscaler capital expenditure slows sharply, Nvidia’s growth rate would likely slow as well.

In that scenario, repurchasing shares aggressively at high absolute market values may look less attractive in hindsight.

The key question is therefore not whether Nvidia can afford the buyback today.

It can.

The question is whether today’s cash generation represents a durable base or the strongest phase of the AI infrastructure cycle.

Why Monday’s Price Action Matters

Nvidia rose while almost the entire broader market was under pressure.

That tells investors the announcement was large enough to create company-specific demand even as macro conditions deteriorated.

But the stock did not surge 10% or 15%.

That restraint is also informative.

The market understands that a buyback does not eliminate concentration risk, competition, customer capital-spending risk or the possibility that AI infrastructure growth eventually slows.

The announcement strengthens the shareholder-return story.

It does not replace the earnings story.

What to Watch Next

Watch actual quarterly repurchase activity.

Watch the share count.

Watch free cash flow.

Watch hyperscaler capital spending.

Watch Nvidia’s fiscal 2028 growth outlook.

Watch competition from AMD and custom accelerators.

And watch whether forward valuation stays near historically low levels for the company.

Nvidia’s record buyback shows how radically AI has changed its financial position.

The next question is whether the company can convert that cash advantage into long-term per-share value after the extraordinary first phase of the AI boom begins to mature.