Nvidia adjusts its free cash flow caliber, raising doubts about the sustainability of its $235 billion repurchase plan

After expanding its stock repurchase authorization to $235 billion, Nvidia began emphasizing the use of free cash flow after deducting strategic purposes to reward shareholders, and external equity investments squeezed out cash available for repurchases and dividends. As of the first half of the fiscal year ending on July 26th, Nvidia had a net cash outflow of $35.2 billion from equity investments, $4.5 billion in cash withholding taxes related to employee stock ownership, and $9 billion in share buybacks to hedge against equity dilution expenses caused by equity incentives. If these expenses are included in the adjustment, Nvidia's free cash flow will decrease from the official statement of $69.9 billion to approximately $21.7 billion, a decrease of about 69%. During the same period, Nvidia added $24.9 billion in long-term debt. Wall Street expects Nvidia's free cash flow for fiscal year 2028 to exceed $330 billion, but if strategic investments continue to expand, the actual cash available for shareholder returns will be lower than traditional levels. There is a capital cycle between Nvidia's investment in AI companies such as OpenAI and Anthropic and its chip sales.