Nvidia Record Buyback Is Seven Times Its Latest Quarterly Cash Flow

Nvidia made a one-line announcement on Monday morning. Its board added $150B to the company's authorization to buy back its own shares.

It is the largest buyback increase any company has approved at once. The previous record was Apple's $110B in May 2024.

Including unused authority, Nvidia can now buy $235B of stock. The company expects to use it through fiscal 2028.

The Chip Index Fell While Nvidia Rose

The announcement landed on a weak day. The S&P 500 closed down 0.86% and the Nasdaq fell 0.55%. The 10-year Treasury yield rose to 5.2%, a 19-year high.

Oil jumped more than 4% after Trump rejected Iran's peace proposal. Chip stocks also came under pressure after OpenAI said one of its AI agents escaped a secure test environment and reached the internet.

The Philadelphia Semiconductor Index fell more than 2%. AMD, Arm, Intel and Micron lost between 4% and 9%.

Nvidia closed up 2.64%. The market value it added that day was about $143B, close to the size of the authorization itself.

The chart is live and counts back three months from today.

An Authorization Is Not a Spending Pledge

A buyback authorization is permission: "you may buy up to this amount." It carries no timetable and no minimum.

Jim Cramer set his condition on CNBC after the announcement: "If they're active and in there every day, it will change the trajectory of the stock."

That condition ties the question to cash.

The market did not read the number as spending.

It read it as permission. How much of it gets used will depend on the cash coming in.

Profit Comes With the Invoice, Cash With Collection

Nvidia's July quarter set a revenue record of $96.2B. In the same quarter free cash flow fell from $48.6B to $21.3B.

Most of the gap sits in receivables. According to Nvidia's 10-Q, receivables were $38.5B at the end of January. By the end of July they were $63.1B.

The company attributes this to extended payment terms for some investment-grade customers on large purchases shipped over several quarters. Reports say average terms lengthened from 45 to 60 days. Inventory also rose to $31.6B ahead of the Vera Rubin transition.

The math is simple. Using the full authorization on schedule requires either collecting receivables or new borrowing.

At the end of July, Nvidia held $99.3B in cash, bonds and equity investments. The resources exist. The question is how much of them will go to buying stock.

What Changes in the Share Count

At roughly $231 a share, $150B buys 649 million shares. That is 2.7% of the 24.1 billion shares outstanding.

Using the full $235B would lift that to 4.2%. On the other side, stock-based compensation runs about $2B a quarter, and those awards add new shares.

The company bought back 203 million shares for $39.8B in the first half. The net reduction is always smaller than the gross purchase.

The Valuation Side

The announcement came near one of Nvidia's cheapest points on expected earnings. Reports put the stock at 16.5 times forward 12-month earnings, its lowest multiple since January 2015.

Jensen Huang said the company can do both jobs at once: "Our cash generation gives us the capacity to invest in the technologies that advance this transformation and return capital to shareholders."

The same morning, Nvidia also released two open-source tools to rein in rogue AI agents. Sources do not separate how much of the stock's outperformance belonged to which headline.

The next data point is the third-quarter report in late November. Two lines matter: how much stock was bought in the quarter, and which way receivables moved.

Sourcing: The authorization and Huang's remarks come from Nvidia's Sept. 28 release; quarterly figures from the company's July-quarter results and 10-Q. Closing figures are from TheStreet's end-of-day summary, the chip selloff from Yahoo Finance, payment terms and inventory from 24/7 Wall St., and the valuation multiple from CP24. The roughly $231 closing price was calculated from the Sept. 25 close and the day's change.