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NVIDIA Primed for Buyback Boost as Tech Giants Shift Capital Allocation
9 Sep
Summary
- HSBC expects share buybacks to remain significant for "Magnificent Seven" tech firms
- NVIDIA could increase buybacks to prevent cash pile from reaching $500B by 2028
- Tech giants have varying strategies, with some focused on capex, others on buybacks
According to a recent HSBC report, the "Magnificent Seven" tech giants are expected to significantly increase their share repurchases in the coming years, even as they ramp up investments in AI-related projects.
The analysts note that capital expenditure (capex) is currently the largest allocation for these firms, accounting for 45% of their spending in 2025. However, they predict that buybacks will still represent a substantial portion of their capital allocation, reaching $236 billion in 2025, well above their share-based compensation of $88 billion.
NVIDIA, which recently introduced a buyback program, is seen as particularly well-positioned to expand its repurchases. The bank's analysts suggest that NVIDIA may need to increase its buybacks to prevent its cash pile from reaching $500 billion by 2028 without further action.
The report contrasts the strategies employed by the different tech giants. While Amazon, Microsoft, and Tesla are focused on capex, Apple and NVIDIA are prioritizing share buybacks. Alphabet (Google) and Meta, on the other hand, are pursuing a mix of capex and buybacks.
The analysts note that some of the "Magnificent Seven" may need to reconsider their capital allocation as the higher total addressable market in AI, cloud, and electric vehicles continues to drive strong cash generation.
