While many analysts and investors will focus on sales and profit growth, two other numbers are more important to me right now.
Nvidia, the darling of the semiconductor world (NVDA -0.84%) is expected to report its third quarter 2025 financial results on November 20th. There’s a lot to take away from the report, but there are two items that stand out to me.
Let’s explore what interests me most as Nvidia’s earnings loom and what I think these factors mean for investors.
1. How is the $50 billion stock buyback progressing?
Throughout the first half of Nvidia’s fiscal year 2025, the company repurchased 162.1 million shares of common stock for $15.1 billion. Under the remaining stock repurchase program, NVIDIA is authorized to repurchase an additional $7.5 billion in stock.
However, in addition to the $7.5 billion mentioned above, NVIDIA announced in August that its board of directors had approved an additional $50 billion in stock buybacks.
On the surface, NVIDIA expanding its share repurchase program could be seen as a bullish sign for investors. Companies typically buy back their own stock when management believes the stock is undervalued. In this particular case, I’d be very interested to know how much of the $50 billion authorization actually went toward stock buybacks.
Data by YCharts.
Based on the past two years, as of this writing, NVIDIA stock is trading below its average price-to-earnings (P/E) and price-to-free cash flow multiple (P/FCF).
There’s reason to believe Nvidia stock is poised to break out, as the company’s new Blackwell GPUs are poised for a hugely successful product launch. Such a move would be accompanied by an expansion in valuations, making the stock more expensive.
For these reasons, I’ll be watching closely to see if the company repurchased stock at more reasonable valuations during the third quarter, before the Blackwell-led tailwinds hit. If not, you can’t help but feel that the $50 billion share buyback is a bit of a PR stunt, or, in the eloquent phrase of Motley Fool contributor Sean Williams, “a campaign of smoke and mirrors.” .
2. Blackwell, Blackwell, Blackwell
The hype surrounding Nvidia’s new Blackwell GPUs is very real. CEO Jensen Huang said demand for Blackwell was “insane,” and Morgan Stanley analysts predicted the product’s launch would generate $10 billion in revenue in fiscal 2025 alone. I predict that.
Blackwell’s story is progressing smoothly, but there may be a little trouble lurking in the background. IT infrastructure company Super Micro Computer specializes in sophisticated chip architectures and storage clusters for data centers. One of the company’s closest partners is Nvidia, which is well-positioned to benefit from Blackwell’s upcoming launch. Well, actually maybe not.
In recent months, Supermicro has been at the center of a scandal stemming from a brief Hindenburg Research report that accused the company of accounting violations. It was recently abolished by the audit firm Ernst & Young. Amid the drama, Nvidia is reportedly planning to move Blackwell orders away from Supermicro instead of other vendors.
I see this as a wise move on behalf of Nvidia management, but it’s hard to know how this will impact supply and demand dynamics in the short term. As a result, Supermicro’s woes could well seep into near-term headwinds to Nvidia’s growth.
Image source: Getty Images.
conclusion
To be clear, if NVIDIA doesn’t start winding down on another $50 billion in share buybacks, or if Blackwell’s growth ends up lasting longer than originally expected in the near term. If that’s the case, I’m not going to run as fast as I can.
Nvidia’s stock price has fallen significantly over the past few years, and thanks to the tailwind from Blackwell, that trend will likely continue for the next year or so. That could make Nvidia stock even more expensive, so it’s natural to wonder when and at what price range management would consider stock buybacks a sound financial move.
