Nvidia increases share buyback program by a record $150 billion

Nvidia Corp. today announced plans to spend another $150 billion on stock buybacks by January 2028.

The move represents the largest expansion of a share buyback program to date. Additionally, Nvidia plans to increase its current dividend to $0.25 per share. The company did not provide any information on the size or timing of the planned increase.

Nvidia says the moves are motivated by two main factors. The first is its rapid revenue growth, the other is the strong performance of its startup investment portfolio. The buybacks provide shareholders with another opportunity to benefit from the company’s success in these areas.

“Our cash generation gives us the opportunity to invest in the technologies that drive this transformation and return capital to shareholders,” said Jensen Huang, Nvidia Chief Executive Officer. “This authorization reflects our confidence in the long-term opportunities that lie ahead.”

Nvidia ended its fiscal second quarter with $22.44 billion in cash and cash equivalents. The company’s adjusted profit and revenue, in turn, have more than doubled thanks to continued demand for its graphics cards. Colette Kress, Nvidia’s chief financial officer, told analysts that the chipmaker expects revenue to rise another 70% in fiscal 2028. Wall Street had expected 40%.

Nvidia’s revenue growth is partly due to its expanding product lineup. Five years ago, the company’s data center portfolio consisted almost entirely of graphics processors. Today the company supplies its customers not only with GPUs, but also with central processing units, network devices and a range of other products.

Nvidia announced in a presentation Today, the company generates $40 billion in revenue for every gigawatt of data center capacity built by customers. That’s a fourfold increase from 2022. The company says its revenue per gigawatt will rise to over $60 billion following the launch of its next-generation Feynman GPU series. The chip series is scheduled to come onto the market in 2028.

The other reason Nvidia decided to increase its share buybacks is the success of its investment portfolio. The company announced today that its portfolio includes stakes in 13 public companies and 229 private startups. According to the presentation, Nvidia’s exits resulted in a more than triple return on investment.

The upcoming IPOs of Anthropic PBC and OpenAI Group PBC are likely to bring another windfall to the chipmaker.

Last November, Nvidia committed to investing $10 billion in Anthropic. The AI ​​provider received a valuation of $183 billion two months earlier. Anthropocene is now allegedly is preparing to go public at a $2 trillion valuation.

OpenAI, for its part, educated $30 billion from Nvidia in a February deal worth $730 billion. The ChatGPT developer is allegedly is in the process of raising a new investment valued at up to $1.5 billion. OpenAI’s IPO could push its shares even higher and further boost Nvidia’s returns.

Photo: Nvidia