Nvidia has drawn fresh scrutiny after expanding its stock repurchase authorization to $235 billion and shifting attention to free cash flow after deducting what it calls “strategic uses.” The change in emphasis suggests that equity investments outside the core business can reduce the pool of cash available for buybacks and dividends, even though the company has not formally changed the standard definition of free cash flow.
Data cited in the report show that in the first half of the fiscal year ended July 26, Nvidia posted a net cash outflow of $35.2 billion for equity investments. Cash withholding taxes tied to employee stock vesting reached another $4.5 billion, while about $9 billion of repurchases were used to offset dilution from stock-based compensation. If those items are included in an adjusted view, free cash flow would fall from the company’s official figure of $69.9 billion to about $21.7 billion, a drop of roughly 69%.
During the same period, Nvidia added $24.9 billion in long-term debt, which partly supported additional stock repurchases. Wall Street still expects the company’s fiscal 2028 free cash flow to top $330 billion, but the report says that if strategic investments keep rising, the cash truly available for shareholder returns may come in far below what the traditional metric suggests.
Nvidia is facing new questions over the durability of its $235 billion stock buyback program after it began highlighting free cash flow available for shareholder returns only after deducting what it described as “strategic uses,” according to BlockBeats on Oct. 10.
That framing points to a key issue: external equity investments can consume cash that might otherwise go to repurchases and dividends. Nvidia has not formally changed the traditional formula for calculating free cash flow, but the shift in emphasis has drawn attention to how much cash is actually left for shareholders.
Data cited in the report show that in the first half of the fiscal year ended July 26, Nvidia recorded a net cash outflow of $35.2 billion tied to equity investments. Cash withholding taxes related to employee stock vesting totaled another $4.5 billion. On top of that, roughly $9 billion of buybacks went toward offsetting share dilution caused by stock-based compensation.
If those items are included in an adjusted measure, Nvidia’s free cash flow would drop from the official $69.9 billion to about $21.7 billion, shrinking by roughly 69%. Over the same period, the company added $24.9 billion in long-term debt, which partly supported additional share repurchases.
Wall Street still expects Nvidia’s fiscal 2028 free cash flow to exceed $330 billion. Even so, if strategic investments continue to expand, the actual amount of cash available for shareholder returns could end up well below what the conventional metric shows. The report also noted a capital loop between Nvidia’s investments in AI companies such as OpenAI and Anthropic and its chip sales, adding to market attention on how sustainable the AI investment boom may be.
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