Nvidia’s massive stock buyback is exactly the kind of move Jim Cramer was looking for. The chipmaker’s board has given the go-ahead for an additional $150 billion in stock buybacks, bringing the remaining total authorized to $235 billion. Nvidia said Monday that the increase is the largest in its history and that it plans to complete the program through fiscal year 2028. The company is currently in the third quarter of fiscal 2027. “This is a very significant share buyback,” Jim told CNBC on Monday. “If they’re active every day, I think the trajectory of the stock will change.” The stock rose about 3% on Monday, giving it a year-to-date gain of about 24%. This would be a nice gain for most companies, but given the company’s position at the center of the AI revolution and its impressive financial performance, NVIDIA stock should do even better. Adjusted earnings per share have more than doubled in consecutive quarters, quite a feat for a company of Nvidia’s size, nearly four years after the generative AI boom began. Nvidia’s revenue is expected to grow 94% in fiscal 2027, accelerating from 60% growth in the previous year, according to FactSet estimates. Despite this, Nvidia is the seventh-worst performer in the 30-stock iShares Semiconductor ETF this year. The ETF as a whole is up 86%, including Monday’s intraday movement. The disconnect between financial results and stock prices is exactly why Jim is urging Nvidia to use its vast and ever-growing cash reserves to buy back stock. Share repurchases reduce the number of shares outstanding, increase ownership of remaining shareholders, and, other things being equal, increase earnings per share. NVDA YTD Mountain Nvidia’s year-to-date stock performance. Earlier this month, Jim asked Nvidia to approve up to $500 billion in stock buybacks, noting that Apple’s long-standing strategy of aggressively and consistently buying back its own stock has been successful. In May, Jim explicitly urged Nvidia to take a page out of its Apple acquisition plans. Former Apple CFO Luca Maestri “would buy it every day,” Jim said during a Monday morning meeting. “Then, if there was a dip, he would buy twice, and if it fell again, he would triple. He continued to buy through all the dips.”In total, Apple repurchased more than $800 billion of its own stock during Tim Cook’s 15 years as CEO, reducing its stock count by about 40%, according to FactSet. If Nvidia follows the same active strategy, “this stock will rise dramatically,” Jim said. Nvidia had already stepped up share buybacks before Monday’s announcement. In May, the company’s board approved an additional $80 billion in stock buybacks with no expiration date. In total, the company repurchased $39 billion in stock in the first two quarters of fiscal 2027, roughly matching the buybacks in all of fiscal 2026, according to FactSet. NVIDIA repurchased approximately $34 billion in fiscal year 2025. NVIDIA is committed to returning at least 50% of its free cash flow to shareholders through stock buybacks and dividends. The company raised its quarterly dividend from 1 penny per share to 25 cents in May. With a dividend yield of less than 0.5%, Nvidia is far from an earnings-oriented stock. However, this decision nevertheless reflects the company’s confidence in its ability to maintain higher dividends in the coming years. Nvidia has also used its financial strength to support the broader AI ecosystem through investments and financing arrangements with customers and other companies building AI infrastructure. The deals have fueled concerns about so-called circular financing, which helps companies finance customers who ultimately spend money on their products. We’re mindful of the risks associated with using Nvidia’s balance sheet, but that’s no reason to exit the stock. And because of the intense demand for AI computing power around the world, Nvidia’s AI chips can be reintroduced if a particular customer that Nvidia supports experiences an issue. The company has enough firepower to increase share buybacks without sacrificing the investments needed to maintain its AI leadership. Wall Street expects Nvidia to generate about $440 billion in unreported free cash flow over the next six quarters, according to FactSet data. This is the period during which NVIDIA said it plans to complete a $235 billion share buyback. “We’re going to generate a lot of cash over the next few years, and we want to be able to generate more cash every year while also being able to return that to our shareholders,” Nvidia CEO Jensen Huang said Monday on CNBC’s “Squawk Box.” For us, the share buyback strengthens the case for owning Nvidia. While the $150 billion in additional approval falls short of the $500 billion Jim requested, it is a big step in the right direction. Businesses continue to benefit from massive AI infrastructure spending, giving executives even more powerful tools to take advantage of that strength when the stock price fails to reflect it. (Jim Cramer’s charitable trusts are long AAPL and NVDA. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. 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