Why does a company do this? Why reduce its public exposure/liability to being taken over? Is there a threat? Do the existing shareholders get better returns on their investments? Are we seeing something that we should concern ourselves? I’ve got to think that’s $25bn coming away from R&D, or not?
This is complicated.
It's flush with cash thanks to AI sales? (not consumer GPU sales).
It can increase stock price and increase its control and if it has a dividend reduce payments.
Understood.
The following seems to be a good rundown about share buybacks - it aligns with other info I've seen about the topic: https://www.investopedia.com/terms/b/buyback.asp
From watching a finance TV program today, NVIDIA's share price has just surged enormously due to - as RogerS points out - AI.
Qantas Airways today announced an underlying $2.5 billion AUD profit for FY 22/23 and has also announced a planned share buyback. And they also announced that they've ordered more new aircraft: 10 x Boeing 787s (nice) and 10 x Airbus A350-1000s - so share buybacks tend to show that a company is doing quite well, also keeping in mind that they need to be reasonably flush with ready cash to fund the buyback.
Should we be concerned NVIDIA's profits and business model seem decreasingly related to consumer GPUs- maybe. Sales of 40XX have been poor by all accounts and pricing is out of line with what buyers expect.
However that may not matter much to the company if sales and profits are elsewhere. I really hope Intel stays in the GPU business and goes for higher-end consumer GPUs as we need more than just AMD.
With record Q2 earnings of $13.5B and jaw-dropping Q3 projections of $16B on AI forecasts, they are calling the cows home. Look for share $$$ to top Amazon's in 2024.