Nvidia’s (NASDAQ:NVDA) second-quarter results on Aug. 23 should have been a triumph for AI enthusiasts. The Silicon Valley chipmaker beat revenue estimates by 20.3% and net profits by 29.5%. These stunning figures would ordinarily send any stock soaring. Or at least give bulls some hope for future earnings growth.
But investors would have been disappointed on both counts. Nvidia’s stock rose less than 1% over the following week — a tiny fraction of what bulls might have expected. And instead of future developments, Nvidia’s management announced a $25 billion stock buyback program. These programs are typically designed to shrink companies and boost earnings per share once growth begins to slow.
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