To The Moon

$NVIDIA(NVDA)$  just put $235 billion behind its own stock.

That sounds like an enormous vote of confidence.

On September 28, Nvidia’s board added another $150 billion to its share-repurchase authorization, taking the remaining authorization to $235 billion through fiscal 2028. Nvidia described it as the largest increase to a buyback authorization in history. 

Then came the market reaction.

Nvidia hit an intraday record of $237.88 on Friday before closing at $233.95, up 1.34%. Its market value finished around $5.7 trillion. 

But here’s the question I keep coming back to:

At these prices, is buying back stock the best use of Nvidia’s enormous cash flow?

The bull case is straightforward.

Buybacks reduce the number of shares outstanding, potentially increasing earnings per share. They also signal that management believes the company can generate enough cash to return billions to shareholders while continuing to invest heavily in AI.

And Nvidia isn’t short of cash generation.

But there’s another side.

A buyback can improve the per-share numbers without changing the underlying demand for Nvidia’s products.

It doesn’t guarantee another surge in data-centre orders.

It doesn’t eliminate competition.

And it certainly doesn’t make future growth happen.

That’s particularly important when Nvidia is already trading at record levels.

The stock has now climbed back to its highs, while AMD has also surged and Broadcom continues to benefit from the expanding AI infrastructure market.

So I don’t think the key question is:

“Is Nvidia’s $235B buyback bullish?”

It clearly can be supportive.

The better question is:

“Can Nvidia grow its earnings fast enough that today’s record price still looks reasonable two years from now?”

That’s the real test.

If AI infrastructure spending keeps accelerating, the buyback could become an additional tailwind on top of extraordinary earnings growth.

But if growth eventually slows, $235 billion of repurchases won’t magically create new demand.

Buybacks can support a stock. They can’t replace growth.

That’s why I’m watching Nvidia’s next earnings growth numbers more closely than the size of the buyback.

Not financial advice. Do your own research and consider your own risk tolerance before making investment decisions.