Nvidia's board has authorized an additional $60 billion for its share repurchase program, signaling continued management confidence in the company's financial strength and strategic focus on Artificial Intelligence (AI). This move underscores a capital allocation strategy that prioritizes significant share buybacks and reinvestment in AI innovation over a substantial dividend payout.

Key Development: Augmented Share Buyback Authorization

On August 26, 2025, Nvidia's Board of Directors approved an additional $60 billion for the company's share repurchase authorization, effective immediately and without expiration. This substantial authorization builds on prior capital return initiatives, with the company having returned $24.3 billion to shareholders through buybacks and dividends in the first half of fiscal year 2026. As of the end of the second quarter, Nvidia still had $14.7 billion remaining under its previous authorization before the new $60 billion was added.

The company's current quarterly cash dividend stands at $0.01 per share, translating to an annual payout of $0.04. This results in a negligible dividend yield of approximately 0.02% and a payout ratio near 1% against its trailing-12-month earnings per share. This indicates that Nvidia retains nearly all its earnings for reinvestment and share repurchases.

Robust Financial Performance Fuels Shareholder Returns

Nvidia's decision to significantly boost its share buyback program comes on the heels of impressive financial results. For the second quarter ended July 27, 2025, Nvidia reported revenue of $46.7 billion, marking a 6% increase from the previous quarter and a substantial 56% rise year-over-year. The Blackwell Data Center revenue, a key driver of the company's AI dominance, grew 17% sequentially.

Gross margins remained strong, with GAAP gross margin at 72.4% and non-GAAP gross margin at 72.7% for the quarter. The company anticipates continued strength, projecting GAAP and non-GAAP gross margins of 73.3% and 73.5%, respectively, for the third quarter of fiscal year 2026.

Nvidia's robust free cash flow, exceeding $25 billion per quarter, and significant cash reserves of $34.8 billion have provided the financial flexibility for such substantial capital allocation. This financial strength, coupled with relatively modest capital expenditures of $1-$2 billion per quarter, creates an environment where the company generates more cash than is immediately required for operations or direct growth investments.

"Blackwell is the AI platform the world has waiting for, delivering an exceptional generational leap — production of Blackwell Ultra is ramping at full speed, and demand is extraordinary," stated Jensen Huang, founder and CEO of Nvidia. "The AI race is on, and Blackwell is the platform at its center."

Strategic Rationale: Reinvestment and Shareholder Value

The expanded share repurchase program reflects Nvidia management's strong confidence in the company's future growth prospects, particularly within the burgeoning AI sector. By repurchasing shares, Nvidia aims to prevent stock dilution from employee options and enhance shareholder value by reducing the outstanding share count. This strategy is viewed as a disciplined approach to capital allocation, leveraging the company's financial strength.

While the substantial buyback signals confidence, analysts offer varied perspectives. Supporters emphasize Nvidia's strong margins and the immense growth potential within AI. Conversely, some critics voice concern about potential underinvestment in research and development (R&D), which stood at $10.5 billion in 2025, representing 25% of revenue. These critics suggest that such large buybacks might coincide with a deceleration in Nvidia's growth trajectory or a perceived lack of high-return reinvestment opportunities, particularly given geopolitical headwinds such as U.S. export restrictions affecting H20 chip sales to China.

Broader Context and Industry Trends

Nvidia's $60 billion buyback is among the largest corporate repurchase programs announced in 2025, following those of tech giants like Apple ($100 billion) and Alphabet ($70 billion). Nvidia's buyback activity has notably accelerated from $25 billion in 2023, underscoring a broader trend among cash-rich technology firms to return capital to shareholders through buybacks.

The company is also strategically investing in global AI infrastructure. In the United Kingdom, Nvidia is collaborating with partners on an initiative that includes an up to £11 billion investment to deploy 120,000 Nvidia Blackwell Ultra GPUs in UK data centers by 2026. This initiative, which includes partnerships with CoreWeave, Microsoft, and Nscale, aims to build the nation's next generation of AI infrastructure and establish Nvidia's hardware as foundational for advanced AI development worldwide.

Outlook: Sustained AI Leadership and Capital Allocation Focus

Looking ahead, Nvidia is poised to continue its aggressive investments in the AI industrial revolution, driven by the strong demand for its Blackwell platform and NVLink rack-scale computing solutions. The company's strategic focus on reinvestment, coupled with significant share repurchases, is expected to remain central to its capital allocation strategy.

While the dividend will likely remain minimal for the foreseeable future, Nvidia's robust earnings power and compounding growth could facilitate modest dividend increases over time, alongside continued substantial repurchases. Investors will closely monitor global AI infrastructure development, geopolitical considerations impacting chip sales, and Nvidia's ongoing innovation pipeline as key factors influencing the company's trajectory in the coming quarters.