Nvidia’s board has approved a massive $50 billion buyback of its shares, announced alongside the company’s second-quarter earnings on Wednesday. The chipmaker exceeded Wall Street expectations, reporting a net income of $16.6 billion and a 122% revenue increase to $30 billion.
Despite these strong results, Nvidia’s stock fell by 2% in regular trading. After the market closed, the stock dropped further, down 6.89%, showing that investors were disappointed with the company’s performance.
Nvidia’s earnings per share for the second quarter were 68 cents, up from 27 cents a year ago. The company also forecasted third-quarter revenue to grow to $32.5 billion, plus or minus 2%.
Nvidia Share Buyback:
The $50 billion buyback is a significant increase from last year’s $25 billion buyback. This move is expected to appeal to income-focused investors and is one of the largest buybacks in the S&P 500. In comparison, Apple had previously repurchased $110 billion in stock, and Alphabet announced a $63 billion buyback.
Investors’ Reactions:
Although Nvidia’s results were solid and the demand for AI chips continues to rise, the company didn’t meet investors’ high expectations. The stock’s decline reflects this disappointment, as previous earnings had significantly outperformed market expectations. Ryan Detrick, chief market strategist at Carson Group, explained that while Nvidia is still growing at an impressive rate, the bar was set too high this time around, leading to a smaller market reaction.
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