Nvidia Could Boost Dividend Yield to 1% at $26–51 Billion Cost
NVDA•Bank of America suggests Nvidia raise its 0.02% dividend yield to 0.5–1%, requiring $26–51 billion (15–30% of 2026 free cash flow) to narrow its 50% P/E and 30% FCF valuation discounts to peers. Analysts also flag benefits from Alphabet’s $180–190 billion AI infrastructure capex and Nvidia’s AI-driven Oklo reactor partnership.
1. BofA Recommends Aggressive Capital Returns
Bank of America analysts led by Vivek Arya argue that lifting Nvidia’s near-zero dividend yield of 0.02% toward 0.5–1% would signal sustainability, attract income funds, and help close a valuation gap with peers.
2. Valuation Discrepancies Highlighted
Despite being the S&P 500’s largest company at about $5.08 trillion market cap, Nvidia trades at 26x/19x 2026–27 P/E versus a peer average of 49x/41.5x, and at a roughly 30% lower market cap-to-FCF multiple despite forecasted FCF of over $400 billion in 2026–27.
3. Oklo Nuclear-AI Collaboration
Nvidia partnered with Oklo and Los Alamos National Laboratory to apply its AI tools and simulation expertise to accelerate nuclear reactor fuel research and design validation, though Oklo remains pre-revenue with multiyear regulatory and execution hurdles.
4. AI Infrastructure Demand from Alphabet
Alphabet’s raised capex guidance to $180–190 billion for AI infrastructure in 2026 and beyond is expected to drive strong GPU and data center processor demand, positioning Nvidia as a key beneficiary.
