Key Highlights
- Nvidia’s stock advanced approximately 3% on Friday, surpassing its previous May peak to set a new intraday record.
- The chipmaker is actively countering arguments from critics like Michael Burry regarding accelerated AI hardware depreciation.
- Evidence cited includes Meta and Google extending their server depreciation timelines from four to six years.
- A historic $150 billion share repurchase authorization was approved, elevating total buyback capacity to $235 billion through fiscal 2028.
- Following discussions with CEO Jensen Huang, Morgan Stanley elevated Nvidia back to its preferred semiconductor investment.
Nvidia (NVDA) shares advanced approximately 3% during Friday’s trading session, establishing a new intraday peak and surpassing the previous closing record from May. The stock reached levels near $237.75, continuing a momentum that has driven gains of roughly 27% year-to-date.
The surge was powered by dual catalysts. The first involves an ongoing disagreement about the actual useful lifespan of artificial intelligence processors. The second centers on substantial capital being returned directly to shareholders.
Consider the depreciation controversy first. Michael Burry, the investor who famously predicted the 2008 financial crisis, has contended that major technology companies are being too optimistic about how long their AI hardware remains viable. If his assessment proves correct, current earnings might be artificially inflated through favorable accounting assumptions.
Nvidia isn’t remaining passive in this discussion. The company is emphasizing that key clients including Meta Platforms and Google have actually lengthened their AI infrastructure depreciation periods from four years to six. This represents a pointed counterargument challenging the foundation of the critics’ position.
Understanding the Buyback Significance
The second catalyst is more direct. Nvidia’s board greenlit an additional $150 billion in stock repurchase authority earlier this week. Combined with existing authorizations, the company now has $235 billion available for buybacks extending through fiscal 2028.
This represents the most substantial buyback authorization ever announced by any corporation. That’s a powerful statement. It demonstrates management’s conviction that Nvidia can maintain robust cash generation even while investing heavily in AI capabilities.
The Street responded positively. Morgan Stanley elevated Nvidia back to its top semiconductor recommendation on Friday after conducting meetings with CEO Jensen Huang and senior leadership. The firm cited sustained AI demand momentum and expanding customer relationships.
Morgan Stanley also identified an important dynamic worth monitoring. The investment bank suggested the primary AI infrastructure constraint is transitioning from semiconductor availability to data center space, electrical power capacity, and project financing.
This represents a significant evolution in the narrative. If processors are no longer the limiting factor, organizations with access to affordable electricity and strategic locations gain increased competitive advantages.
Broader Artificial Intelligence Context
Nvidia’s situation doesn’t exist in isolation. The wider AI investment landscape has market participants looking beyond raw infrastructure expenditures toward subsequent phases of the technological evolution.
Anthropic’s anticipated public offering is contributing momentum to that transition. A stock market debut for the company behind Claude would represent another significant measure of investor enthusiasm for AI enterprises and the substantial capital required for their expansion.
For Nvidia in particular, the pairing of unprecedented buyback authorization with an active defense against its detractors provides the stock with renewed momentum entering October. The company has chosen to directly engage rather than ignore the depreciation controversy.
Nvidia additionally collaborates with financial institutions to facilitate approximately $500 billion in capital deployment supporting the AI ecosystem, a figure that highlights the enormous scale of what’s at stake in this discussion surrounding processor longevity and investment levels.
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