Sept 28 (Reuters) - Nvidia boosted its share buyback authorization by a record $150 billion, eclipsing Apple's $110 billion approval in 2024, making a big bet on its own stock as intensifying AI-chip competition weighs on its performance relative to peers.
Shares of Santa Clara, California-based Nvidia rose more than 2%. Through Friday, the stock was up just over 20% this year, broadly in line with the Nasdaq 100 but trailing AMD, which has more than doubled, and Intel, which has more than tripled.
Technology companies are racing to build AI infrastructure, but investors are questioning whether the massive spending boom that propelled Nvidia to become the world's most valuable company can be sustained.
With strong demand for its pricey processors generating billions in cash, Nvidia is using part of the windfall to boost its remaining buyback capacity to $235 billion, which it expects to deploy through fiscal 2028.
"The AI buildout won't continue at its current pace forever, but Nvidia is signaling confidence that demand for its hardware and services has staying power," said Jacob Bourne, an analyst at Emarketer.
"Its cash generation is currently strong enough that it believes it can continue investing heavily in the business while also returning capital to shareholders," he added.
Nvidia shares were trading at about 16.5 times 12-month forward earnings, their lowest multiple since January 2015 and well below the 15-year average of 30, according to LSEG data, which some analysts see as a sign of slowing profit-growth expectations.
Ben Barringer, head of technology research at Quilter Cheviot, said the buyback echoes Apple's playbook of using repurchases to support its stock as growth slows and valuation multiples come under pressure.
Stock buybacks fell about 50% between July and September 23 as companies turned more cautious amid heavy investment needs, partly driven by the AI boom fueling Nvidia's growth, and economic uncertainty.
"Our cash generation gives us the capacity to invest in the technologies that advance this transformation and return capital to shareholders," CEO Jensen Huang said in a statement.
Nvidia's growth outlook backs that stance. Last month, Nvidia forecast about 70% revenue growth for fiscal 2028, reassuring investors who have questioned how long the AI spending surge can last after years of explosive growth.
Monday's $150 billion buyback increase exceeds the market capitalization of about 84% of the S&P 500 constituents, according to data compiled by LSEG.
Nvidia ended the July quarter with $22.44 billion in cash and cash equivalents. It last announced an $80 billion share buyback in May.
(Reporting by Anhata Rooprai in Bengaluru, additional reporting by Shashwat Chauhan, Sruthi Shankar and Harshita Mary Varghese in Bengaluru; Editing by Shreya Biswas, Christian Plumb and Anil D'Silva)
