A single chipmaker now fills about 8% of a standard S&P 500 fund
Nvidia's US$150 billion addition to its buyback program lands with the chipmaker already filling about 8% of a standard S&P 500 fund, a weighting that brings concentration and tax questions for Canadian clients who hold it through index products.
Nvidia said Monday that the addition lifts its total repurchase authorization to US$235 billion, which it called the largest share repurchase authorization increase in history. It expects to complete the total remaining program through fiscal 2028.
Eight cents of every S&P 500 dollar
Holdings data for the US-listed iShares Core S&P 500 ETF as of September 23 put Nvidia at 8.21% of the fund and the top ten names at 38.69%.
Nvidia and Apple together exceed 15% of the index, the highest two-stock weighting in its history and above the 9.1% combined weight of Microsoft and General Electric before the dot-com crash.
Nvidia's shares have climbed 24% over the past 12 months, which lifted its market capitalization to US$5.42 trillion.
The stock was up 2.8% on Monday, and market data showed a latest close of US$228.86, up US$3.79 or 1.68%, with after-hours trading at US$229.42, up US$0.56 or 0.24%.
The Nvidia buyback does not by itself raise the company's index weight. The S&P 500 weights each member by float-adjusted market value, so Nvidia's share of the index grows only when its market value rises faster than the rest of the index.
Josh Sheluk of Verecan Capital Management said in May that index investors may not realize how concentrated these exposures can be.
"I probably wouldn't call it a problem, but I would say it's a risk," he said.
Regulators expect concentration to be tracked
In a December 2025 joint staff notice, the Canadian Securities Administrators and CIRO reported that many firms do not consistently assess concentration and liquidity within and across client accounts. The regulators said firms need client-level documentation when internal concentration thresholds are breached.
Statistics Canada data show Canadians sold a record C$31.0 billion of US shares in July, mostly large-cap technology stocks, after they invested C$78.1 billion in US equities during the first half of 2026.
A larger dividend meets Canadian tax rules
In May, Nvidia's board approved an additional US$80 billion buyback and raised the quarterly dividend to US$0.25 per share from US$0.01. The Financial Times reported that the change put Nvidia's annual dividend payments at roughly US$24 billion.
Account type determines how much of that dividend clients keep. The Canada-US tax treaty exempts US dividends in RRSPs, RRIFs and LIRAs from withholding, while TFSAs, FHSAs and RESPs face the 15% treaty rate, and non-registered accounts can claim a foreign tax credit.
Measured against a trillion-dollar buyback market
Nvidia returned US$41.1 billion through dividends and buybacks in fiscal 2026, when operating cash flow exceeded US$102 billion, and it ended that year with US$58.5 billion left under its authorization.
S&P 500 companies spent a then-record US$1.020 trillion on buybacks in the 12 months to September 2025, according to S&P Dow Jones Indices. Its senior index analyst, Howard Silverblatt, said the 1% US excise tax on net buybacks had not reduced overall buyback activity.
Bloomberg described Apple's US$110 billion authorization in May 2024 as the largest US buyback on record, based on Birinyi Associates data that goes back to 1999.
The cash behind the Nvidia buyback
"Our cash generation gives us the capacity to invest in the technologies that advance this transformation and return capital to shareholders," CEO Jensen Huang said in a statement. He added that the authorization shows confidence in the long-term opportunity ahead.
On CNBC's "Squawk Box" on Monday, Huang said Nvidia would generate a lot of cash in the coming years and would like to return that cash to shareholders each year.
He described the current period as "the largest infrastructure build-out in human history."
Nvidia produces the most advanced chips used for AI and has been a major beneficiary of the boom in AI infrastructure spending. Huang said Nvidia's growth "is being driven by a once-in-a-generation platform shift to AI and accelerated computing."
S&P Global Ratings said in August that combined hyperscaler capital expenditure is projected to exceed US$1.3 trillion by 2027, and Huang said earlier this month that Nvidia would double the number of chips it sells in 2027.
Its lineup includes Grace Blackwell and Vera Rubin GPU systems, CPUs, switch and optical networking chips, laptop chips, Jetson chips for robots and cars, and the chip in Nintendo's Switch 2.
Sheluk said advisors can manage index concentration through equal-weight strategies, active management, value factor strategies or partial index re-weighting. He added that no single approach achieves diversification alone and that allocations should align with each client's goals and time horizon.
