You think Nvidia's $235 billion buyback is big. Just wait and see what Micron might do
When is $100 billion worth more than $235 billion? That’s what we’re going to find out. In investing, price is what you pay; value is what you get. It’s a saying that works for buybacks as well. The share repurchase authorization is what you get, but the market capitalization tells you how valuable it is. Heading into Micron earnings, one of the biggest questions was: How large could the company’s buyback be in 2027 once the CHIPS Act restrictions expire? We did not get the full answer Wednesday evening when the memory maker reported its incredible fiscal 2026 fourth quarter and robust forward demand guidance. However, in the post-earnings conference call, CFO Mark Murphy provided enough information to get a sense of what to expect in a buyback. It has the potential to be a really, really big number as a percentage of Micron’s nearly $1.2 trillion market cap. MU YTD mountain Micron YTD We’ll go through what Murphy said and the math in a second — but all in, we think a $100 billion Micron buyback is very much in play. We’ve seen $100 billion-plus buybacks before from Apple and Nvidia . In fact, Jim has been pushing Nvidia CEO Jensen Huang for months to increase its buyback and embark on the kind of program that Apple successfully executed over Tim Cook’s 15 years as Apple CEO. On Monday, Nvidia listened, adding a $150 billion share repurchase authorization, bringing its total buyback plan to $235 billion, or roughly 4.3% of the company’s $5.5 trillion market cap. Noting that he thought the Nvidia buyback should be nearly double that, Jim said he was pleased nonetheless and thinks it could “change the trajectory” of the stock. We like buybacks because they can boost the share price by putting a big, new buyer into the market. Additionally, reducing share count boosts earnings per share without any growth in the business. As long-term investors, we believe that companies’ stocks tend to follow fundamentals. If Micron were to go with a $100 billion buyback, that number would be 8.3% of the company’s market cap, or nearly double the magnitude of Nvidia’s program despite carrying a sticker price of less than half on a dollar basis. It would also be more on par with the percentage of market cap that Jim was pushing on Nvidia. With the tale of the tape out of the way, let’s dig in on what Micron could deliver. On the earnings call, Murphy said, “We intend to increase our capital return from Dec. 9, 2026, the second anniversary of the signature of our definitive CHIPS agreements. Over time, we expect to return 100% of our excess cash to shareholders.” During the question-and-answer session, the first question was on the potential buyback. Rather than asking about how big it could be, the UBS analyst skillfully asked when the company may reach its target cash level. In response, Murphy said, “On target cash, we expect to be around a target cash level by the end of fiscal Q1.” Over time, we expect to return 100% of our excess cash to shareholders. Micron CFO Mark Murphy Those two lines from Murphy give us everything we need to do some back-of-the-envelope math. If Micron expects to hit its target cash level by the end of its fiscal 2027 first quarter, which is the company’s calendar November 2026 quarter, and it expects to return 100% of excess cash to shareholders, then the question becomes: How much excess cash can the company generate in the final three fiscal quarters of 2027? For that, we turn to cash flow estimates from FactSet. The idea being, FCF is already defined as operating cash flow less capital expenditures. So, while some of that free cash flow may be reserved for future obligations, it provides a pretty good starting point for about how much cash could be coming our way in the fiscal year ahead. Per FactSet, here is where quarterly free cash flow estimates stand. Fiscal 2027 Q1: $28.88 billion Fiscal 2027 Q2: $32.26 billion Fiscal 2027 Q3: $35.26 billion Fiscal 2027 Q4: $37.23 billion Adding up the final three quarters of fiscal 2027, we get total free cash flow of $104.75 billion. For simplicity’s sake, that’s where we get our $100 billion buyback estimate. Add in Micron’s commentary on why the memory demand should remain structurally undersupplied through 2027 and into 2028, and we think it’s safe to argue that $100 billion in 2027 is only the starting point for Micron’s buyback. Keep in mind, we have kept our analysis relatively conservative given some views on The Street. Ben Reitzes, the closely followed analyst at Melius Research, told CNBC in an interview Thursday morning, “It’s all going to result in a buyback of epic proportions. The buyback that those guys and Sandisk can do in ’27 and ’28 is something Jensen can’t even do … [as] a percentage of the market cap. It’s over 10% a year; it might be 15% a year easy.” Reitzes has been so right on the AI trade in recent quarters that you ignore him at your own peril. What percentage of the float ultimately gets pulled out of the market cap, and what the resulting impact on EPS is, depends on the share price at the time the shares are actually repurchased. If share prices move lower, a larger percentage will get repurchased. That’s important because it tells us that, assuming no change in the fundamental outlook, a pullback in shares will make the buyback-driven earnings growth over the next few years all the more material. Should shares trade higher, a smaller percentage will be retired. However, we would be sitting on shares priced higher than they stand now, making it something of a win/win. It’s all going to result in a buyback of epic proportions. Melius Research analyst Ben Reitzes Why have Micron shares on Thursday been bouncing on either side of unchanged on Thursday despite such a positive outlook? It could be that Micron stock has surged so much this year — nearly 280% in 2026 — that it’s going to take more than back-of-the-envelope math to get shares really moving. The memory trade has been off-the-charts this year — but, remember, it’s also been very volatile. The stock is still 13% away from its all-time high of $1,255 on June 25. Reitzes said the lack of a big follow-through rally in Micron on Thursday could be that nobody has ever seen this before from Micron, and it’s almost too hard to believe. He certainly has a point — not to mention that Micron shares trade at an extremely undemanding price-to-earnings multiple of less than 6 times fiscal 2027 EPS estimates, according to FactSet. Anyway you look at it, Micron is on the verge of buying back a massive share of its market cap as the AI trade has resulted in the company drowning in cash. Mark your calendars: early December is when the floodgates are expected to open. (Jim Cramer’s Charitable Trust is long MU, NVDA, AAPL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. 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