Michael Burry Says Nvidia Spent $112.5 Billion On Buybacks Adding 'Zero' Shareholder Value — 'The True Cost...'

Investor Michael Burry publicly challenged Nvidia’s capital allocation, asserting that the company’s $112.5 billion of buybacks since 2018 have produced “zero” shareholder value because much of that repurchase activity merely offset $20.5 billion of stock-based compensation and left 47 million more shares outstanding despite roughly $205 billion of net income and $188 billion of free cash flow over the period. The critique lands against the backdrop of Nvidia’s blockbuster Q3 — $57 billion revenue, up 62% year-over-year — and management’s bullish AI-driven revenue projections (including $500 billion from Blackwell and Rubin architectures by 2026) plus continued buybacks and strategic investments with partners such as OpenAI and Anthropic. While the market has rewarded Nvidia with roughly 35% YTD gains versus ~17% for the Nasdaq, Burry’s analysis underscores a valuation and “owner’s earnings” debate that investors should factor into models that currently treat repurchases as straightforward value accretion.

Analysis

Michael Burry publicly challenged Nvidia's capital allocation, arguing that $112.5 billion of buybacks since 2018 produced "zero" shareholder value because repurchases largely offset dilution from $20.5 billion in stock-based compensation and yet shares outstanding are up by 47 million despite about $205 billion in net income and $188 billion in free cash flow over the same period. Burry's contention is that management treated buybacks defensively to neutralize SBC rather than to reduce the share base and thereby materially increase owners' earnings.

Nvidia delivered blockbuster Q3 results with $57 billion of revenue, up 62% year-over-year, and management projected up to $500 billion in revenue from Blackwell and Rubin architectures by end-2026; the company also reiterated continued buybacks and strategic investments in the CUDA ecosystem with partners such as OpenAI and Anthropic. CFO commentary emphasized maintaining a strong balance sheet to fund growth and secure supply chains, framing buybacks as one component of broader capital allocation.

Market reaction has been positive: NVDA is up 34.86% YTD versus roughly 17% for the Nasdaq, finished the regular session at $186.52 (up 2.85%) and gained another 5.08% in extended trading, though Benzinga Edge flags a poor value ranking and a weak short-term trend. The key investor implication is a governance and accounting debate that should be modeled explicitly—treating buybacks net of SBC alters owner’s earnings and valuation multiples and heightens execution and transparency risk around capital returns.

Key Decisions for Investors

• Re-run valuation models treating buybacks net of SBC (adjust outstanding share count and owner's earnings) to test how much reported buybacks have actually reduced per-share dilution
• Maintain exposure if you are constructively positioned on Nvidia's AI-driven demand given $57B Q3 revenue and management's $500B 2026 projection, but size positions considering a poor value ranking and recent outperformance
• Monitor quarterly disclosure of share count changes, SBC expense, and detailed buyback execution; consider trimming or hedging near-term positions if buybacks continue to merely offset SBC without reducing net shares outstanding
• Watch management's capital allocation commentary and execution on supply-chain investments and partnerships as catalysts that could validate or undermine the current premium valuation