Nvidia’s board has cleared the way for the company to spend US$150 billion more in share buybacks as the chipmaking giant looks to make use of more of its stellar revenue growth fuelled by demand for its high-end artificial intelligence chips.
The Santa Clara, California company said Monday the share buyback increase, which it touted as the largest ever, brings its stock repurchase programme to US$235 billion.
Nvidia said it expects to “execute” the share buyback plan through its fiscal year that ends in January 30, 2028.
Companies use repurchases, in part, to return cash to investors and support the stock’s price. Earnings per share can increase because there are fewer shares outstanding. Buybacks also signal confidence from leadership about a company’s financial prospects.
“NVIDIA’s growth is being driven by a once-in-a-generation platform shift to AI and accelerated computing,” said Jensen Huang, Nvidia’s founder and chief executive officer. “Our cash generation gives us the capacity to invest in the technologies that advance this transformation and return capital to shareholders. This authorisation reflects our confidence in the long-term opportunity ahead.”
Shares in Nvidia climbed 2.3 per cent in morning trading Monday. The stock is up about 24 per cent so far this year.
Nvidia’s high-end chips have emerged as the leading building blocks for AI, and are highly sought after. The company reported quarterly profits of US$59.69 billion late last month.
While AI has powered stock market gains and US economic growth in recent years, there’s been growing scepticism about whether AI will justify the trillions of dollars being spent to develop the technology.
The AI industry is also faces increasing pushback amid objections to the expansion of data centres and fears that the rapid speed of AI adoption could lead to widespread job losses worldwide.
AP
