Nvidia (NASDAQ:NVDA) defiled itself with earnings which should undercut investor faith in the company for many quarters to come. The graphics chip firm took a charge of nearly $200 million for releasing a faulty chip. It posted a loss of $120 million and revenue dropped slightly. Nvidia also says it underestimated competition from rival AMD (AMD), one of the worst run technical companies on the planet.
As a nifty way to offset all of that bad news, Nvidia said it would buy-back $1 billion of its shares. That spiked the stock price up 10% after hours. It still trades near its 52-week low, but under normal circumstances a bad quarter would have knocked the stock down.
Since Nvidia has a market cap of only $6 billion, it is taking a lot of its shares out of circulation, which should, in turn, improve EPS.
The rise in NVDA shares is a sign of how desperate the market is to find some scintilla of good news in a sea of disastrous earnings. That could bring share buy-backs back into vogue.
It may be a cheap trick, but it looks like it works.
Douglas A. McIntyre
Are You Ahead, or Behind on Retirement? (sponsor)
If you’re one of the over 4 Million Americans set to retire this year, you may want to pay attention.
Finding a financial advisor who puts your interest first can be the difference between a rich retirement and barely getting by, and today it’s easier than ever. SmartAsset’s free tool matches you with up to three fiduciary financial advisors that serve your area in minutes. Each advisor has been carefully vetted, and must act in your best interests. Start your search now.
Don’t waste another minute; get started right here and help your retirement dreams become a retirement reality.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.