By Christine Ji

Nvidia is expanding its buyback program to $235 billion while Alphabet and Meta halt repurchases and reallocate money to their AI initiatives

Nvidia expanded its stock-repurchase authorization by $150 billion, bringing its total buyback program to $235 billion.

Nvidia is swimming in cash - enough to make history with the announcement of a new $150 billion buyback program - but its customers are experiencing a very different financial reality.

The company's (NVDA) fresh buyback authorization points to a widening gap between the chipmaker and the rest of the tech industry, Nicholas Colas, co-founder of DataTrek Research, highlighted in a Tuesday note. As the supplier of the chips and servers powering the artificial-intelligence boom, Nvidia has grown its free cash flow in the face of unrelenting demand. Now, when factoring the money Nvidia had left over on a prior buyback authorization, it's aiming to repurchase $235 billion worth of stock through January 2028.

"Nvidia is the only U.S. Big Tech company in any real position to increase its stock buyback, which is both good and bad news," Colas wrote. "On the plus side, the world's most valuable company is signaling confidence in its future cash flows. On the downside, its clients cannot express similar faith."

Companies that buy back their stock in the open market reduce the number of shares outstanding, which helps boost earnings per share.

While executives sometimes initiate share repurchases when they think the company's stock is undervalued, that's a flawed view of the corporate strategy, Colas said. Nvidia's stock is indeed cheap, with a valuation of 17x estimated forward earnings, but that's not the primary reason for the buyback.

"Managements and boards are in the business of allocating the capital entrusted to them by shareholders," Colas wrote. "When they have opportunities that exceed their cost of capital, they should invest in them. When they run out of those, they should buy back stock."

Nvidia has identified and acted upon opportunities with sufficient return on investment. The company has assumed the role of a venture capitalist in the AI value chain, strategically investing in customers and business partners. But after investing in its core business and the ecosystem around it, Nvidia still has cash left over - leading to its latest $150 billion share buyback authorization.

On the opposite side are Big Tech companies like Alphabet (GOOGL) (GOOG) and Meta (META), which view data centers and AI infrastructure as necessary areas worth heavy investment.

As a result, those two companies have pared back their spending on buybacks in recent quarters. In the quarter ending Dec. 31, 2024, Alphabet spent over $15 billion on share buybacks, according to FactSet. A year later, the number dropped to $5.5 billion, and in early 2026 Alphabet halted its share buybacks altogether. For the most recent quarter ending June 30, Alphabet recorded negative free cash flow, meaning that the company's spending on AI infrastructure and data centers outpaced the cash generated by its core business.

Meta's share-buyback program, while not as robust as Alphabet's, has also flatlined. After spending over $10 billion on share repurchases a year ago, Meta hasn't bought back any shares for the past three quarters.

Whether their money is being appropriately allocated is another question, according to Colas. Alphabet is projected to spend up to $205 billion on infrastructure investments in 2026, and Meta is expected to spend up to $145 billion.

While corporate leaders generally aim to invest where expected returns exceed their cost of capital, they also want to ensure that their companies can stay relevant amid technological disruption.

"They will therefore invest in anything their competitors are also working to build, even if the potential returns are uncertain," Colas said. "The penalty for falling behind is, in theory, increasingly irrelevance and, eventually, bankruptcy."

Not all Big Tech companies are slashing their buybacks in favor of investing in AI. Microsoft (MSFT) has maintained a steady capital-allocation strategy while growing its Azure cloud business. Apple (AAPL) has also developed a track record of consistent buybacks, returning $25 billion in the most recent quarter. Whether these companies can maintain this level of share repurchases remains to be seen.

-Christine Ji

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09-29-26 1652ET