NVDA Boosts Share Buyback to $235B: Reinforcing AI Stack, Monetizing Tech Businesses

SPEAKER_1 (0:00)

Paul Powers, the CEO at Fisna and Matt Bryson, the Managing Director of Equity Research and Hardware over at Wedbush Securities. Thank you both for being with us. I mean, looking at Nvidia right now, we're very, very close here. We're at 236.86 this morning for Nvidia. Paul, as we look at this authorization of this additional $150 billion in buybacks, that brings our remaining authorization up to $235 billion overall. What does that tell you about how confident Jensen Huang is in the future of Nvidia's cash generation?

Paul Powers (0:34)

He's extremely confident. At that amount of buyback, you're seeing that Nvidia is not just generating hype around AI, it's generating extraordinary amounts of cash. He should be confident that AI chip sales last quarter reached 96.2 billion which is doubling year over year. So what they're saying is, Nvidia believes that the stock price, even at today's level, is the deal, that it makes sense to put more money and capital into that stock. There's more upward momentum. So I think he's saying we're bullish.

SPEAKER_1 (1:04)

And Matt, that $235 billion, that's an extraordinary number here. As you look at that, is this buyback, has this become a meaningful part of the Nvidia investment thesis, or is it still secondary to their underlying AI growth story?

Matt Bryson (1:21)

I think it's secondary to the underlying growth. Look, they've told you that they can grow 70% next year.

And the multiple is well below that. Having said that, you go and buy back your shares when you think you're undervalued. And I think this tells you that Nvidia thinks that their stock is a great invest.

SPEAKER_1 (1:43)

And so Paul, if the bigger story here isn't the buyback, it's this AI growth prospect and this concept that Nvidia is increasingly making moves to transform itself from a GPU company into this major AI infrastructure player. What does that actually mean in terms of the businesses that Nvidia could ultimately monetize?

Paul Powers (2:08)

Well, the number of businesses they can monetize is substantial. The infrastructure layer of AI is no small feat to tackle. I think that they're starting in a great direction with the open Asian security platform or safety platform. Everyone's worried about security with AI, whether that's security from China and the actions that they've been engaged in, or even AI itself, and I've been saying for some time now, the best way to police AI is with AI.

Sentry, one of the products they have in that platform, is able to quarantine agents that try to move outside their boundaries within milliseconds. So it's a very effective way to make sure that AI is not behaving in a bad manner, in an unintended manner.

It's something that is universally applicable and a really great starting point for Nvidia as they start to build out this trajectory. There's really no upper total trustful market limit that we can in the near term. There's no one else has really claimed that title of the infrastructure for all AI. There's a lot of business potential there.

SPEAKER_1 (3:11)

Matt, let's dive into this new AI security platform. How are you looking at this as Nvidia is increasingly trying to own the entire AI stack? I mean, what is the potential here? And where do you see any fundamental problems with this new software?

Matt Bryson (3:27)

So I don't claim to be an expert in security. And I don't know if Nvidia is going to own the AI security stack. But whether the security is coming from Nvidia, a traditional security player, or something that, say, OpenAI and Anthropic are building on their own, it also lives on hardware. And so you look at the Sentry platform, it lives on Nvidia's DPUs.

It could live on compute, it could live on the accelerators. But you need a hardware platform to support that. We heard from Anthropic, I mean, I'm sorry, from OpenAI a few weeks ago at AI Infra, was that they don't see AI development slowing down, rather they see a parallel path to creating security that creates guardrails, for the agents, and you're just going to need more hardware for that. And so, Nvidia is going to be a winner, Broadcom is going to be a winner, Intel is going to be a winner in my view, just because you need this additional hardware. And if Nvidia can also supply the platform and the software, even better for them.

SPEAKER_1 (4:35)

All right. As we look at Nvidia, we're just knocking on the door of another all-time high. We've gotten within two pennies of it so far today on the session. Really appreciate you both joining us to take a closer look at Nvidia and its outlook and how these buybacks and this new AI tool may affect its future going forward. Paul Powers, CEO at Fisna, and Matt Bryson from Wedbush Securities.