Jim Cramer Wonders If Nvidia's Reported $20 Billion Debt Raise Signals An Apple-Style Buyback Strategy Because Stock Is 'Too Cheap'
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Nvidia Corp’s (NASDAQ:NVDA) reported plans to raise at least $20 billion through a bond offering have sparked speculation on Wall Street, with Jim Cramer questioning whether the AI chip giant could be borrowing money to fund stock buybacks similar to Apple Inc.’s (NASDAQ:AAPL) long-running capital return strategy.
Cramer Draws Apple Comparison After Nvidia Debt Filing
Nvidia is seeking to raise at least $20 billion through a debt offering, marking the chipmaker’s first bond sale since the AI boom took off, CNBC reported on Monday, citing sources with knowledge of the matter.
The company disclosed plans for a capital raise in an SEC filing, but did not specify an amount.
The Jensen Huang-led tech giant previously said it could issue up to $25 billion in unsecured commercial paper and sources said the debt offering could ultimately approach that figure.
Reacting to the report, Cramer asked on X, “Could Nvidia’s bond sale mean that it is going like Apple and starting to buy in its own stock as it is too cheap?”
The speculation comes just weeks after Nvidia unveiled an aggressive shareholder return plan, raising its quarterly dividend and authorizing up to $80 billion in share repurchases.
Why Is Nvidia Raising Billions Despite Strong Cash Flow?
Nvidia’s move has drawn attention because the company remains one of the most profitable businesses benefiting from the AI boom.
The chipmaker generated $49 billion in free cash flow during its latest quarter and has said it expects to return roughly half of its annual free cash flow to shareholders.
An Nvidia spokesperson told CNBC that proceeds from the offering would be used for general corporate purposes, including the repayment and refinancing of existing debt.
The company currently carries about $7.5 billion in long-term debt and roughly $1 billion in short-term debt.
AI Spending Drives Rush To Debt Markets
Kristina Partsinevelos, CNBC’s Nasdaq correspondent, noted that many technology companies are turning to debt markets as AI-related capital expenditures surge.
“Big Tech is tapping debt markets because AI capex is draining cash,” she said, while noting that Nvidia’s situation differs from peers because of its strong profitability and shareholder returns.
Earlier this month, Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) announced plans to raise $85 billion through equity-linked offerings after securing more than $55 billion in debt since November.
Last week, Super Micro Computer Inc. (NASDAQ:SMCI) unveiled $7 billion in financing deals to help fund hardware component purchases.
The bond sale would mark a dramatic increase from Nvidia’s last debt offering in 2021, when the company raised $5 billion, before the launch of ChatGPT helped ignite the AI spending frenzy.
Price Action: Nvidia shares closed Monday at $212.45, up 3.54% and slipped 0.24% to $211.93 in after-hours trading, according to Benzinga Pro.
According to Benzinga Edge Stock Rankings, Nvidia stock ranks in the 98th percentile for growth, reflecting a strong price trend across short, medium and long term.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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