Nvidia (NVDA) Unleashes $150 Billion Buyback While Defending AI Chip Lifespan Estimates

TLDR

• Nvidia stock advanced approximately 3% on Friday, establishing a new intraday peak above its May record.
• Management is actively challenging assertions from critics including Michael Burry regarding overly optimistic AI chip depreciation assumptions.
• The chipmaker highlights that Meta and Google have lengthened their server depreciation periods from four to six years.
• Directors approved an additional $150 billion share repurchase program, elevating total authorization to $235 billion extending through fiscal 2028.
• Following discussions with CEO Jensen Huang, Morgan Stanley elevated Nvidia to its preferred semiconductor position.

Nvidia (NVDA) shares advanced approximately 3% during Friday’s trading session, establishing a new intraday peak that surpassed the previous all-time closing record set in May. The stock was changing hands near $237.75, continuing a momentum run that has delivered roughly 27% gains year-to-date.

NVIDIA Corporation, NVDA

The upward movement stemmed from a pair of catalysts working in tandem. First came an intensifying discussion regarding the actual useful life of AI accelerators. Second arrived substantial capital earmarked for shareholder returns.

The depreciation controversy centers on investor Michael Burry, famous for anticipating the 2008 subprime mortgage collapse, who has maintained that technology giants are using overly generous assumptions about AI chip longevity. Such accounting practices, if overstated, could be inflating current earnings figures.

Nvidia has mounted a public defense. The semiconductor manufacturer is drawing attention to evidence that key clients including Meta Platforms and Google have actually increased their AI server depreciation timelines from four-year periods to six-year schedules. This data serves as a direct counter to the concerns raised by critics.

Understanding the Repurchase Impact

The second catalyst proved more conventional. Nvidia’s board of directors greenlit an incremental $150 billion share repurchase program earlier this week. Combined with existing authorization, the company now has $235 billion available for buybacks extending through the end of fiscal 2028.

This represents the most substantial buyback authorization any corporation has ever announced. The magnitude carries significance beyond the dollar figure. It demonstrates management’s confidence in sustained cash generation capacity even while making massive investments in AI infrastructure development.

The announcement resonated across Wall Street. Morgan Stanley elevated Nvidia back to its top semiconductor recommendation on Friday after conducting meetings with CEO Jensen Huang and senior leadership. The investment bank cited persistent AI demand strength and an expanding customer ecosystem.

Morgan Stanley’s analysis also identified an evolving dynamic worth monitoring. According to the firm, the primary constraint in AI infrastructure deployment is transitioning from semiconductor manufacturing capacity toward data center real estate, electrical power availability, and project financing.

This represents an important evolution in the industry narrative. When chips stop being the limiting factor, organizations controlling affordable electricity and strategic locations gain competitive advantages.

The Broader AI Landscape

Nvidia’s situation exists within a larger artificial intelligence ecosystem. Market participants are increasingly focusing beyond infrastructure capital expenditures toward the subsequent phases of technological advancement.

Anthropic’s anticipated public offering is contributing momentum to this theme. A stock market debut for the company behind Claude would represent another prominent benchmark for measuring investor enthusiasm toward AI businesses and the substantial capital requirements necessary for scaling operations.

For Nvidia particularly, the pairing of record-setting buyback authorization with a proactive response to its detractors provides the equity with renewed catalysts entering October. Rather than allowing the depreciation discussion to simmer in the background, the company has chosen direct engagement.

Nvidia maintains collaborative relationships with financial institutions to facilitate deployment of approximately $500 billion in capital supporting artificial intelligence sector development, a figure that illustrates the substantial stakes embedded in this ongoing debate surrounding chip operational lifespans and infrastructure investment.