Analysts Propose $26B-$51B Capital Returns to Close Nvidia’s 50% P/E Gap
Bank of America analysts argue that Nvidia could close its 50% P/E valuation gap with Magnificent Seven peers by raising its dividend yield to 0.5%-1%, requiring $26-$51 billion in capital returns (15%-30% of projected 2026 FCF). Nvidia trades at 26x 2026 earnings despite forecasting over $400 billion FCF in 2026-27.
1. BofA's Capital Return Proposal
Bank of America analysts propose that Nvidia boost its cash return program by allocating $26 billion to $51 billion—15% to 30% of projected 2026 free cash flow—to lift its dividend yield toward 0.5%-1%.
2. Valuation Discount to Peers
Nvidia trades at 26x 2026 estimated earnings and a roughly 30% lower market cap-to-FCF multiple than Apple and Microsoft, reflecting a near 50% P/E discount to the 49x average of top AI peers.
3. Historical Return Rates and Investor Base
Over the past three years, Nvidia returned 47% of free cash flow via dividends and buybacks—well below the 80% peer average and its own 82% 2013-2022 rate—resulting in a token 0.02% yield and limited inclusion in income-oriented funds.