Nvidia just authorized a $150 billion share buyback. The largest in history. They said so themselves in the press release, which means it's definitely true and not at all a carefully worded phrase designed to make you forget Apple exists.
The company will spend $150 billion buying its own stock from shareholders who apparently need the liquidity more than they need to own shares of a company printing money faster than the Treasury. This makes perfect sense. When you're running the most dominant semiconductor company on Earth, the smart move is to return capital to people desperate enough to sell you.
Retail traders are already doing the math wrong. They think buybacks mean the stock goes up because there are fewer shares. They don't understand that buybacks mean management looked at every possible investment opportunity—new fabs, more research, aggressive expansion—and decided the best use of $150 billion was giving money to people who want out.
But here's the technical picture. The stock closed at a price. It will open at a different price. Then it will move to another price. This will continue until it stops. The buyback authorization changes nothing about this process. The shares don't care that Nvidia wants to be both the buyer and the seller. The chart doesn't have feelings.
Some analyst at a bank you've never heard of will upgrade the stock to Super Mega Buy Plus with a price target of infinity dollars. Retail will read the headline, buy calls, and then spend the next six months watching Nvidia trade sideways while they try to figure out why their options expired worthless. The answer is the same as always: because you bought them.
The largest buyback authorization in history is just the newest way to separate idiots from their money, except this time Nvidia's doing it to its own shareholders with their enthusiastic consent.
Photo by Mariia Berezovsky on Unsplash
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