The Hidden Truth Behind Buybacks & Cash FlowNVIDIA CorporationBATS:NVDAgiorgalexis🔥 The Hidden Truth Behind Buybacks & Cash Flow: What Investors Miss in NVIDIA’s Numbers Why RSUs and Working Capital can distort the real story Most investors see two big numbers and get excited: ✔ huge buybacks ✔ huge operating cash flow But rarely do they understand what’s actually happening behind the scenes. Let’s break down NVIDIA’s latest filings in simple, real numbers. 🔹 1. RSUs Inflate Share Count — Buybacks Don’t Always Reduce It Everyone loves to hear “the company is buying back shares.” But here’s what most investors don’t realize: RSUs (employee stock awards) create new shares → dilution. Buybacks must first neutralize that dilution before reducing total shares. Let’s look at NVIDIA’s own numbers (Q1 FY2026 – Apr 2025): ▶ Shares Issued from Stock Plans: +50M ▶ Shares Withheld for Taxes (RSU taxes): –13M ▶ Shares Repurchased: –126M 📌 Net share reduction = 126 – 50 + 13 = 89M This means: Although NVIDIA spent $14.5B on buybacks, the true reduction was only 89M shares. And the cost? ▶ “Issuance (Retirement) of Stock, Net” = –$13.725B (Q1) ▶ Q2: –$23.445B ▶ FY: –$33.216B This is not real reduction — it’s a treadmill: RSUs add shares the company buys back shares RSUs add more the company buys back again If NVIDIA ever stopped buybacks for even one quarter, shares outstanding would jump instantly. 🔥 Simple Example (for investors): Start of quarter: 1,000M shares RSUs issued: +40M → 1,040M Buybacks: –50M → 990M The investor thinks they bought back 50M shares. In reality? ➡ True reduction = only 10M. ➡ 80% of buybacks were just neutralizing dilution. This happens every quarter. 🔹 2. Working Capital Boosted Cash Flow — Not Operations Look at NVIDIA’s operating cash flow (OCF): Q1 FY2026 OCF: +$27.414B But the key line is this: Changes in Working Capital: +$8.654B This means: $8.6B of the operating cash flow came from timing of receivables, payables, and inventory — NOT from actual operations. This is crucial because: ✔ It’s cyclical ✔ It’s temporary ✔ It reverses next quarter Example from the next periods: Q2 FY2026 “Changes in WC”: –$2.368B FY2025: –$9.383B Q4 FY2025: –$3.520B Working capital swings can boost or crash cash flow without any change in real profitability. 🔥 Why This Matters Investors often misinterpret: 🚫 A jump in Operating Cash Flow = “Strong business performance” But many times: ✔ It’s just Working Capital cycling ✔ Not improved EBITDA ✔ Not improved margins ✔ Not better demand ✔ Not better efficiency It’s accounting timing, not operational strength. 🔹 3. The Combination Can Mislead Investors In a single quarter, NVIDIA showed: ✔ +8.6B boost from WC ✔ $14.5B spent on buybacks ✔ Net true share reduction only 89M This creates the illusion of: higher OCF higher EPS fewer shares But much of this stems from: accounting timing (WC) neutralizing dilution (RSUs) Not from: organic profitability sustainable improvements 🔥 Conclusion: What Every Investor Should Watch If you want to understand the real strength of a company, focus on: ✔ Net Shares Change (after RSUs) Not just “buybacks.” ✔ OCF minus Changes in Working Capital Not the headline OCF. ✔ True organic cash generation Not timing effects. ✔ SBC (Stock-Based Compensation) Because SBC = dilution = more future buybacks. 📌 Final Wake-Up Call RSUs inflate share count. Buybacks only offset them. Working capital inflates cash flow. Neither guarantees stronger fundamentals. If you want to see the real story, you must look beneath the headline numbers.