Nvidia Just Broke the Buyback Record 💰️

Welcome back to the Day Trading newsletter 📈

Nvidia handed shareholders a record $150 billion buyback on Monday while the rest of the market sagged under Treasury yields at their highest since 2007 and a fresh scare in oil.

Let’s get into it 👇️ 

🔻 Stocks fell Monday as Treasury yields climbed to their highest level since 2007. The Dow dropped 0.7%, the S&P 500 fell 0.8% and the Nasdaq slid 0.9%, with the 10-year yield touching 5.24%. Higher yields make borrowing costlier and make stocks look less attractive next to bonds.

🛢️ Oil pared its gains Monday after President Trump rejected an Iranian truce proposal. Brent crude settled at $105.28 a barrel and WTI at $92.60, both up modestly after touching session highs on the news. The rejection raised fears the supply disruption from the Middle East could drag into November. (DTN)

🥇 Gold fell as much as 4% Monday to $4,111 an ounce, its lowest level since August 5. Gold pays no interest, so surging Treasury yields and bets on a second straight Fed rate hike in October (priced at roughly 70%) made it less attractive to hold.

💲 Fed Governor Lisa Cook warned that AI demand and higher oil prices will keep pushing inflation up. Inflation ran about 3.8% over the 12 months through August, nearly double the Fed's 2% target. The Fed raised rates to 3.75%-4% in September, its first hike in three years, and Cook said more depends on incoming data.

✈️ The FAA is delaying certification of Boeing's 737 MAX 10 over a newly discovered software issue, sending the stock sharply lower. Boeing fell as much as 7%. The GE Aerospace-supplied software can raise pilot workload during aborted landings, and certification that had been expected in October now has no firm date.

💼 MongoDB CEO CJ Desai left to lead Meta's new enterprise AI business, and the stock plunged roughly 18% to 20% Monday. Former CEO Dev Ittycheria returned as interim chief and the company reaffirmed its guidance, but investors focused on the leadership gap. Meta launched its enterprise platform the same day.

💰️ AMD agreed to buy Fei-Fei Li's World Labs in an $8.2 billion all-stock deal. Li, the AI pioneer behind ImageNet, will become AMD's chief scientist. The deal, expected to close by year-end pending regulatory approval, gives AMD a foothold in "world models" for robotics as it chases Nvidia.

📉 Fair Isaac plunged more than 20% Tuesday after the FHFA said Fannie Mae and Freddie Mac will let VantageScore compete with FICO for mortgages. The move ends FICO's long-running lock on mortgage credit scoring and could lower costs for borrowers. The stock was already down about 50% this year.

Nvidia's board added $150 billion to its share repurchase program on Monday, the largest authorization increase in history.

That lifts the chipmaker's total remaining authorization to $235 billion, which it plans to use through the end of fiscal 2028 (January 30, 2028). The previous record was Apple's $110 billion authorization in May 2024.

A buyback is simply a company using its own cash to purchase its shares on the open market: fewer shares outstanding means each remaining share represents a bigger slice of the profits.

Nvidia's second-quarter revenue hit $96.2 billion, up 106% from a year earlier, with $89 billion of that coming from data centers, and it returned about $26 billion to shareholders through buybacks and dividends in that quarter alone.

Spreading $235 billion over the roughly 16 months left in its fiscal year works out to around $44 billion a quarter, well above that pace.

Put simply, Nvidia is telling investors the AI boom is producing more cash than it can profitably reinvest, which is a useful counterweight to this week's worries about AI companies borrowing heavily at rising rates.

Nvidia trades at about 24 times forward earnings versus about 20 for the S&P 500, per Yahoo Finance, so it is also making a bet that its own stock is still cheap.

What to watch:

• An authorization is a ceiling, not an obligation, so watch how much Nvidia actually repurchases in coming quarters.

• Its next earnings report, guided to roughly $108 billion in revenue, will show whether the buyback pace is being matched by cash generation.

• The bigger question is whether Nvidia's customers keep spending on AI chips as borrowing costs climb.

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⚠️ Disclaimer: Not financial advice. Do your research before making any trades.