Nvidia (NASDAQ: NVDA) turned in putrid earnings. It also announced that it would buy back a ton of its own shares.

The graphics chip company took a charge of nearly $200 million in its last quarter for product problems. Nvidia also admitted it did not see strong competition coming from rival AMD (NYSE: AMD). Nvidia lost $120 million in the quarter and revenue dropped slightly. Under most circumstances, especially in a weak market, the company's shares would be punished.

But according to The Wall Street Journal, "On a positive note, Nvidia announced a $1 billion increase to its stock-buyback program." For a company with a market cap of only $6 billion that is a big deal.

Share buybacks often do not do much for a company's stock price, but in a market where earnings are having a rough time in most sectors, the idea that EPS can be pushed up by a falling number of shares in the float could become more attractive. It is a form of "reverse dilution," which could find a new place in a bear market.

Nvidia share shares rose 10% after hours [shares are rising 6% in premarket as of 8:10 a.m.]. It may be a signal to management at other companies that buybacks are a sign that a firm thinks its shares are undervalued. The market cares more about that than it used to.

Douglas A. McIntyre is an editor at 247wallst.com.