BofA Proposes $26B-$51B Buyback to Boost Nvidia Yield and Narrow 50% Valuation Gap
NVDA•BofA analysts highlight Nvidia’s near-zero 0.02% dividend yield and suggest boosting to 0.5%-1% by allocating $26B-$51B (15%-30% of 2026 FCF) to close its 50% P/E valuation discount versus peer average of 49x/41.5x. Alphabet’s raised AI infrastructure capex to $180B-$190B for 2026 and higher 2027 spending underpins continued Nvidia GPU demand.
1. BofA Dividend Yield Proposal
BofA analysts call on Nvidia to raise its dividend yield from 0.02% to between 0.5% and 1% by reallocating $26B to $51B in free cash flow. This move would align Nvidia’s yield with Apple and Microsoft and signal stronger shareholder returns.
2. Valuation Discount Analysis
At 26x/19x 2026/27 P/E versus a peer average of 49x/41.5x, Nvidia trades at roughly a 50% P/E discount. On a free cash flow basis, its market-cap-to-FCF multiple sits about 30% below Apple and Microsoft.
3. Capital Return Capacity
Nvidia is projected to generate over $400B in free cash flow during 2026–27. Allocating 15%–30% of this cash for dividends and buybacks would boost returns to peer-average levels and potentially broaden its investor base.
4. AI Infrastructure Demand from Alphabet
Alphabet raised its AI infrastructure spending guidance to $180B–$190B for 2026 with further increases planned for 2027. This capex surge is expected to drive higher demand for Nvidia’s data-center GPUs across AI initiatives.
