NVIDIA Adjusts Free Cash Flow Metric Amid $235 Billion Share Buyback Plan

Huo Xing Finance reports that on October 10, after expanding its share repurchase authorization to $235 billion, NVIDIA began emphasizing returning free cash flow to shareholders after deducting "strategic purposes," implying that external equity investments will compete with cash available for repurchases and dividends. However, NVIDIA has not formally revised its traditional free cash flow calculation formula. Data shows that for the first half of the fiscal year ended July 26, NVIDIA’s net cash outflow from equity investments reached $35.2 billion, with an additional $4.5 billion in cash withheld for employee stock vesting-related taxes, and approximately $9 billion used for repurchases to hedge against equity dilution from stock-based compensation. If these expenditures are included in adjustments, its free cash flow would drop from the reported $69.9 billion to approximately $21.7 billion—a reduction of about 69%. During the same period, NVIDIA added $24.9 billion in long-term debt, partially funding additional share repurchases. Although Wall Street expects NVIDIA’s free cash flow for fiscal year 2028 to exceed $330 billion, if strategic investments continue to expand, the actual cash available for shareholder returns may be significantly lower than traditional metrics suggest. NVIDIA’s investments in AI companies such as OpenAI and Anthropic also create a cash cycle with its chip sales, raising market concerns about the sustainability of the AI investment boom.