Nvidia adds another $150 bn to massive stock buyback

LAUREN MCCARTHY & KALLEY HUANG

Nvidia said on Monday it would spend another $150 billion buying back its own shares, adding to what it said was the largest repurchase in history, as the chip company continues to cash in on a global race to dominate artificial intelligence.

The increase comes four months after the chipmaker’s board added $80 billion to the company’s buyback program, bringing the total remaining amount authorized to $235 billion.

“Nvidia’s growth is being driven by a once-in-a-generation platform shift to AI and accelerated computing,” Jensen Huang, Nvidia’s CEO, said in a statement.

“Our cash generation gives us the capacity to invest in the technologies that advance this transformation and return capital to shareholders,” he added. “This authorization reflects our confidence in the long-term opportunity ahead.”

Nvidia’s announcement is the latest sign of the extraordinary flood of money into the markets being fueled by the AI boom. A host of companies are rushing to build data centers and release new models, spending billions to get ahead.

Share buybacks are viewed as a way to reward investors, including executives and employees, because they can potentially lift a company’s stock price by limiting the supply of its shares for sale. But critics say the actions have only a marginal impact, if any, on the company’s stock price and instead take money away from potential investments in hiring, construction or research and development.

Buybacks often suggest that a company believes its stock price is undervalued, said Vivek Arya, a research analyst at Bank of America.

Nvidia’s stock price has skyrocketed amid the explosion in demand for AI. Nvidia’s chips are the centerpiece of giant AI data centers and demand for those chips has become a barometer of growing demand for the technology. Nvidia’s stock rose nearly 4 per cent on Monday.

The chipmaker has also placed its deep pockets on one side of a debate over how AI should be developed and shared. Nvidia has argued that AI developers must be able to make open-source models, which can be freely downloaded and modified, so people can further develop technologies and build new businesses. The debate over open-source models has heated up since July, when OpenAI’s AI systems went rogue and broke into Hugging Face. This month, Nvidia agreed to spend $12.9 billion to buy Hugging Face. On Monday, Nvidia introduced opensource software to monitor and control the actions of AI agents, which can do tasks by themselves.