Nvidia, the American multinational technology company, has announced a $25 billion share buyback program after its stock has more than tripled this year.
The company’s shares have surged some 220% in 2023, leaving investors searching for the reasons behind the company’s move. Nvidia’s move to buy back its shares after such a remarkable performance has been propelled by an unprecedented surge in demand for its cutting-edge chips.
The buyback is the fifth-biggest repurchase announcement among U.S.-based companies this year.
Companies commonly repurchase their stock as a way to return capital to shareholders. Such buybacks can benefit a stock’s price by reducing the supply of shares, increasing demand, and boosting earnings per share. However, Nvidia’s stock buyback has surprised some investors as they cheered a stellar second-quarter report.
The announcement of the buyback program comes after Nvidia forecasted third-quarter revenue above Wall Street targets. The company’s quarterly revenue forecast has been fueled by an artificial intelligence boom that has driven demand for its chips.
Nvidia’s move to buy back $25 billion of its shares will fuel AI optimism, boost earnings per share, and benefit the company’s shareholders. The move comes after an unprecedented surge in demand for its cutting-edge chips and a stellar second-quarter report.