Nvidia Stock Buyback Debate: Why Jim Cramer Calls for $500 Billion Buyback

CNBC host Jim Cramer called on September 2, 2026, during his show "Mad Money" for an unprecedented stock buyback program from Nvidia: $500 billion, roughly ten percent of the chipmaker's current market capitalization of $5.46 trillion. The demand is modeled on Apple and would increase the company's existing buyback program fivefold.

Cramer's Core Argument: Undervaluation Despite Growth

Cramer calls Nvidia's current valuation "radically undervalued." The chipmaker is trading at a forward multiple of 23x based on earnings estimates of $9.05 per share for the fiscal year ending in January 2027 – a valuation Cramer called "absurd." The host emphasizes: "Right now, I believe there's no better investment for Nvidia than Nvidia".

According to Cramer, the valuation gap stems from the contrast between growth and multiple: for fiscal year 2028, the analyst projects growth of roughly 70 percent. Nvidia grows like a startup but is valued like a mature company. The trailing multiple stands at 44x, while the forward multiple is significantly lower.

Financial Foundation for a Mega-Buyback

Nvidia currently generates free cash flow of $21 billion per quarter – a base that would theoretically enable a large-scale buyback program. In the quarter before September 2026, the company reported revenue of $96.22 billion, up 105.85 percent year-over-year. The data center business – Nvidia's growth driver in artificial intelligence – recorded revenue of $89.02 billion, an increase of 117 percent.

Non-GAAP gross margin stands at 75 percent, indicating high profitability. For the October quarter, Nvidia guided to $108 billion in revenue (±2 percent). The remaining authorization for share repurchases stands at $99 billion as of the SEC filing for the second quarter of fiscal year 2027.

In May 2026, Nvidia spent nearly $20 billion on buybacks and announced a new $80 billion program, supplemented by approximately $40 billion from the previous program. Cramer's demand would increase this volume by a factor of five.

Apple as a Blueprint for Aggressive Capital Allocation

Cramer points to Apple as the blueprint for his demand. The iPhone maker has conducted massive share buybacks over the years to return capital to shareholders and support valuation. Cramer calls for Nvidia to execute the program with "aggressive daily implementation" – a similarly continuous approach as Apple.

A stock buyback program – in English: Share Buyback – refers to the repurchase of its own shares by a company on the open market. This reduces the number of outstanding shares, which increases earnings per share and is often interpreted as a signal of undervaluation by management.

Market Context and Competitive Situation

Cramer sees a contradiction between the price movement since late October 2025 and the fundamental business situation. The price development suggests that the market expects a demand shock, despite Nvidia having an "impressive order pipeline" and high profitability. The host interprets the market reaction as a mispricing.

In the competitive environment, AMD and Broadcom are developing custom accelerators for cloud hyperscalers seeking alternatives to Nvidia. However, both competitors have not overcome the software barrier of Nvidia's CUDA platform – a development environment for computationally intensive applications on graphics processors. CUDA is considered a decisive competitive advantage and ties customers to Nvidia hardware long-term.

Disclaimer and Regulatory Hurdles

Cramer emphasized explicitly that his demand represents a personal opinion and does not reflect the view of CNBC. Nvidia has not announced a $500 billion buyback program. Such an undertaking would require approval by the company's board of directors and is subject to complex capital market regulations.

The debate falls in a period when the Nasdaq Composite declined 0.29 percent on September 4, 2026, to 26,506.99 points, while the S&P 500 fell 0.42 percent to 7,713.13 points. The DAX gained 0.05 percent to 26,048.5 points.

Analyst Views: $400 Price Target Even Without Buyback

According to reporting from September 2, 2026, at least one analyst expects a price target of $400 for Nvidia stock – even without a massive buyback program. The assessment underscores that the fundamental valuation discussion extends beyond Cramer's proposal and various scenarios exist for further price development.