Nvidia Buyback Proposal
Jim Cramer Urges Nvidia to Authorize Massive Half-Trillion-Dollar Share Buyback
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Key Points
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A $500 billion buyback would retire roughly one-tenth of Nvidia's shares, lifting earnings per share by about 11% purely from a lower share count—an financial-engineering gain rather than an operating one.
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Cramer's argument for 'cheapness' relies on a forward earnings base of about $9.05 for the fiscal year ending January 2027, which puts Nvidia around 23x forward versus about 44x on a trailing basis.
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Nvidia’s latest quarter featured $96.22 billion in revenue, with Data Center revenue at $89.02 billion up 117% year over year, a non-GAAP gross margin of 75%, and guidance for the October quarter of about $108 billion +/- 2%.
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JPMorgan's Harlan Sur argues AI demand is broad across hyperscalers, neoclouds, AI labs, sovereign AI projects and enterprise customers; he also says Nvidia could more than double YoY in FY28 if supply constraints were removed and notes that inference is becoming a larger portion of data-center activity.
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Dell Technologies’ AI push illustrates the broader ecosystem feeding Nvidia’s growth: Dell reported record AI server orders (about $60.9 billion) and an AI backlog nearing $95 billion, with Nvidia’s Vera Rubin platform among the engineered rack systems.
Jim Cramer is pushing Nvidia to authorize a $500 billion share buyback — the largest in corporate history — arguing the stock is undervalued at 23 times forward earnings. Yahoo Finance reports the Mad Money host says the move would retire roughly one-tenth of the chip giant's shares and boost earnings per share by about 11% through financial engineering alone, even as Nvidia's core AI business remains white-hot with $96.22 billion in quarterly revenue.
The proposal comes as Nvidia navigates a rare tension: explosive demand for AI chips paired with questions about whether current valuations leave room for growth. Supporters point to the company's 75% gross margin, 117% year-over-year growth in data-center revenue, and $108 billion guidance for the next quarter. Critics counter that a buyback creates no new products — it's pure financial engineering, not an operating upgrade.
The Case for a Half-Trillion Dollar Bet
Cramer argues Nvidia trades cheap relative to its forward earnings power. At about $9.05 in forward earnings for fiscal 2027, the stock sits at just 23x forward multiple — far below the 44x trailing multiple. Yahoo Finance notes he sees this valuation gap as justification for aggressive capital returns to shareholders, even with Nvidia's momentum intact.
What a $500B Buyback Actually Does
A half-trillion dollar repurchase would retire about one-tenth of Nvidia's outstanding shares. The immediate math: fewer shares divided into the same earnings lifts per-share profit by roughly 11%. But that gain is pure math, not a real business improvement. No new chips. No faster growth. No competitive edge — just a lower denominator dividing the same numerator.
JPMorgan Sees Broad and Sustained AI Demand Ahead
Not everyone agrees Nvidia needs a financial gimmick. JPMorgan analyst Harlan Sur argues AI demand will stay broad across hyperscalers, edge-cloud providers, sovereign AI projects, and enterprise customers. He notes that removing supply constraints could let Nvidia more than double revenue in fiscal 2028. He also flags a shift toward inference — the cheaper, lower-margin task of running trained models — as a growing share of data-center work.
Dell's Booming AI Server Orders Show the Tailwind Behind Nvidia
The broader ecosystem feeding Nvidia's growth is red-hot. Dell Technologies reported record AI server orders of about $60.9 billion and a backlog nearing $95 billion, fueled by demand for systems featuring Nvidia's Vera Rubin platform. This underscores why some analysts believe Nvidia's growth story may not need financial engineering — the underlying demand is doing the heavy lifting.
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