Key Takeaways
- Nvidia (NASDAQ: NVDA) approved a record $150 billion increase to its share buyback, taking its total remaining authorisation to $235 billion, the largest single buyback increase in history, bigger than Apple's $110 billion in 2024.
- The money comes straight from AI cash flow: Nvidia generated $74 billion in operating cash in just the first half of its fiscal year, enough to invest heavily in AI and return tens of billions to shareholders at the same time.
- The striking backdrop: Nvidia trades at roughly 16.5 times forward earnings, its lowest valuation since January 2015 and about half its 15-year average, even as its profits soar.
- The debate: bulls see a company buying back its own shares "on the cheap" out of confidence; sceptics see a low multiple that may signal slowing profit-growth expectations, and fewer places to reinvest.
- The takeaway: a buyback is a real signal of confidence, but not a guarantee, and a low P/E can mean opportunity or caution.
- Research it your way: you can invest in global stocks and ETFs from just $1 with zero commission on the Nemo.money app.
When the market started asking "how long can the AI boom last?", Nvidia answered with a cheque. On 28 September 2026, the world's most valuable chipmaker (NASDAQ: NVDA) approved a record $150 billion increase to its share buyback programme, the largest such increase any US company has ever announced, lifting its total remaining capacity to $235 billion. The shares rose about 2%.
What makes the move especially interesting is the timing. Despite record profits and a market value above $5 trillion, Nvidia's stock trades at its cheapest valuation in more than a decade. Is the company spotting a bargain in its own shares, or is the market quietly telling us something about the AI boom's future? This guide explains what a buyback is, why Nvidia is doing this now, and the honest debate. If it prompts you to research the theme, you can explore global stocks and ETFs from just $1 with zero commission on the Nemo.money app.
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What Nvidia Announced
The facts, in plain English:
- 💰 A record $150 billion. Nvidia's board authorised an extra $150 billion for buying back its own shares, on top of what was already approved, taking its remaining buyback capacity to $235 billion, to be used through fiscal 2028.
- 🏆 The biggest ever. It's the largest single buyback authorisation increase in US history, surpassing Apple's $110 billion approval in 2024. To put $150 billion in perspective: it exceeds the entire market value of roughly 84% of the companies in the S&P 500.
- 📈 Funded by AI cash. Nvidia isn't borrowing to do this. Surging demand for its AI chips generated about $74 billion in operating cash flow in just the first half of its fiscal year. Its buybacks have been climbing fast: roughly $34 billion in fiscal 2025, over $40 billion in fiscal 2026, and $39 billion in the first half of fiscal 2027 alone.
- 🗣️ A statement of confidence. CEO Jensen Huang said the company's cash generation lets it "invest in the technologies that advance this transformation and return capital to shareholders," adding that the authorisation "reflects our confidence in the long-term opportunity ahead."
- 🔄 Against the tide. Notably, US corporate buybacks overall fell by about half from July through late September. Nvidia is moving in the opposite direction, and at scale. (The same day, it also launched an "Open Agent Safety Platform" to help secure AI agents, timely, given the recent case of an AI agent breaching a government website.)
What Is a Buyback, and Why Does It Matter?
If you're newer to investing, this is the crucial concept, and it's simpler than it sounds.
- 🧮 Fewer shares, bigger slices. A buyback (or share repurchase) is when a company uses its cash to buy its own shares from the market, then retires them. Fewer shares outstanding means each remaining share represents a bigger slice of the company, and of its profits. That mechanically lifts earnings per share (EPS).
- 🏗️ A floor under the stock. Because the company becomes a steady, large buyer of its own shares, buybacks can provide ongoing support for the share price, especially during dips.
- 💵 An alternative to dividends. Buybacks are one of two main ways companies return cash to shareholders (the other is dividends). Many growth companies prefer buybacks because they're flexible and can be more tax-efficient for investors, and legendary investors like Warren Buffett have long favoured well-timed buybacks as a sign of disciplined capital allocation.
- 🚦 A signal, but not a promise. Crucially, an authorisation is a ceiling, not a commitment: the company can buy back shares as it chooses, and can pause or stop at any time. It signals that management thinks the shares are worth buying, but it isn't a guarantee they will, or that the price will rise.
- 🌐 Why Nvidia's matters more than most. Nvidia is such a huge part of the S&P 500 and Nasdaq that a buyback this size doesn't just support NVDA, it can influence the indices, and therefore the index funds millions of people own, a reminder of just how central it has become to the wider AI trade.
The Striking Part: Nvidia Is the Cheapest It's Been Since 2015
Here's the twist that makes this more than a big-number story.
- 📉 A decade-low valuation. Nvidia's shares trade at roughly 16.5 times forward 12-month earnings, their lowest multiple since January 2015, and well below the company's 15-year average of about 30, according to LSEG data cited by Reuters. Its forward P/E has been declining steadily since the AI boom took hold in 2024.
- 🤔 How can that be, when it's worth $5 trillion? Because Nvidia's profits have grown even faster than its share price. A P/E ratio is price divided by earnings: when earnings explode, the multiple compresses even if the stock rises. Nvidia is, in that sense, "cheaper" today than during most of its history, relative to what it earns.
- 🎯 Why buy back now. Management appears to see a rare moment: enormous cash, a stock trading at a historically low multiple, and (in its view) a long AI runway ahead. Buying back shares "on the cheap" is, from the company's perspective, a good use of cash. As one former Wall Street analyst put it, management is buying its own stock at a multiple cheaper than most S&P 500 companies.
The Honest Debate: Confidence, or a Warning?
This is where investors should slow down, because the same facts support two very different readings.
- 🐂 The bull case: confidence. Nvidia has the cash to invest heavily in AI and return record sums, without choosing between the two. The buyback says management believes demand for its chips has staying power, and that the stock is undervalued. Add a forecast of roughly 70% revenue growth next fiscal year, and bulls see a bargain backed by real profits.
- 🐻 The bear case: what the low multiple might be saying. A P/E this low for a company growing this fast is unusual, and some analysts read it as the market expecting profit growth to slow, or worrying about how long the AI infrastructure spending spree can last. From this view, the market isn't mispricing Nvidia; it's pricing in a future that's less spectacular than the recent past.
- 🔁 The reinvestment question. There's a subtler debate too: when a company returns $235 billion to shareholders, is it because it's confident, or because it has fewer high-return places to reinvest that cash? Both can be true at once. Buybacks are often a sign of a maturing business as much as a booming one.
- ⚖️ Both can be right. Nvidia can be a magnificent, cash-gushing company and a stock whose growth is decelerating from extraordinary levels. The buyback is a genuine positive signal, but it doesn't settle the question of what the AI boom looks like in three years.
The Honest Risks
- ⚠️ An authorisation isn't a commitment. Nvidia can slow or pause buybacks at any time; $235 billion is a ceiling, not a promise.
- ⚠️ A low P/E can be a trap. A historically cheap multiple sometimes reflects a genuine bargain, and sometimes the market correctly anticipating slower growth. The chart hasn't broken out yet either: the stock met resistance around $232-234 after the news.
- ⚠️ AI-spending dependence. Nvidia's cash flow depends on the AI infrastructure boom continuing; any slowdown in customers' spending would hit both profits and the buyback's firepower.
- ⚠️ Concentration and volatility. Nvidia is a huge, volatile stock that swings on AI sentiment, and it dominates many index funds, so its moves ripple widely.
- ⚠️ Buybacks don't fix fundamentals. Reducing the share count lifts EPS mechanically, but it can't manufacture demand or protect against competition (AMD and others are pushing hard).
The takeaway: Nvidia's record buyback is a powerful, cash-backed vote of confidence, and the "cheapest since 2015" valuation is genuinely striking. But a buyback is a signal, not a guarantee, and a low multiple is a question, not an answer. The disciplined move is to understand both readings, research the fundamentals, and decide for yourself what the AI boom's next chapter looks like.
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Frequently Asked Questions (FAQs)
What is a stock buyback?
A stock buyback (or share repurchase) is when a company uses its own cash to buy its shares from the market and retire them. With fewer shares outstanding, each remaining share represents a larger slice of the company and its profits, which mechanically lifts earnings per share. Buybacks can also support the share price by creating steady demand. They're one of two main ways companies return cash to shareholders (the other is dividends). Importantly, a buyback authorisation is a ceiling, not a commitment: the company can pause or stop at any time.
How big is Nvidia's buyback?
Nvidia's board approved a record $150 billion increase to its share repurchase programme on 28 September 2026, the largest single buyback authorisation increase in US history, surpassing Apple's $110 billion approval in 2024. It lifts Nvidia's total remaining buyback capacity to $235 billion, to be used through fiscal 2028. For scale, the $150 billion increase alone exceeds the entire market value of roughly 84% of S&P 500 companies.
Why is Nvidia's stock considered cheap?
Nvidia trades at roughly 16.5 times its forward 12-month earnings, its lowest valuation multiple since January 2015 and well below its 15-year average of about 30, according to LSEG data. It's "cheap" relative to its own history and earnings, not in absolute price: a price-to-earnings ratio is price divided by earnings, and Nvidia's profits have grown even faster than its share price, compressing the multiple. Whether that low multiple is a bargain or a sign the market expects slower growth is the key debate.
Is Nvidia's buyback good for investors?
For existing shareholders, a buyback is generally supportive: it reduces the share count (lifting earnings per share), creates steady demand for the stock, and signals management's confidence that the shares are worth buying. But it isn't a guarantee of rising prices: an authorisation is a ceiling, not a commitment; buybacks can't fix fundamentals or protect against competition; and a company returning huge sums may also have fewer high-return ways to reinvest. Weigh it as one positive signal among many factors.
Is Nvidia a good investment now?
That depends entirely on your own research, goals and risk tolerance, and this isn't advice. Nvidia is an extraordinarily profitable company, generating tens of billions in cash and trading at a historically low multiple, with a record buyback signalling management's confidence. But the same low multiple may reflect the market expecting AI-driven growth to slow, the stock is volatile and dependent on the AI spending boom continuing, and competition is intensifying. Both the bull and bear cases have merit.
Final Thoughts: A Cheque Where Others Offer Words
There's something telling about Nvidia's move. As doubts have grown about how long the AI boom can last, plenty of companies have offered reassurance in words. Nvidia offered $150 billion, the largest buyback in US history, funded entirely by the cash its AI chips are generating right now. That's a statement of confidence that's hard to dismiss, and it arrives while the stock trades at its cheapest valuation in over a decade.
But the most useful lesson here isn't about Nvidia alone; it's about how to read signals. A buyback is a genuine positive, but it's a ceiling, not a promise, and it can reflect a maturing business as much as a booming one. A low P/E is genuinely striking, but it can mean a bargain or a market bracing for slower growth, and sometimes both. Nvidia may well be a magnificent company whose growth is decelerating from extraordinary heights; those two things aren't contradictory. For investors, the discipline is to hold both readings at once, do the research, and resist letting a big number, however impressive, do the thinking. Understand the signal, then decide.
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