Nvidia Could Return $26–51 B to Lift Yield to 0.5%–1%: BofA
Bank of America analysts propose Nvidia boost its dividend yield to 0.5–1%, deploying $26–51 billion (15–30% of projected 2026 free cash flow) to narrow its 30% market-cap-to-FCF discount versus Apple and Microsoft. Alphabet’s raised AI infrastructure CapEx to $180–190 billion signals sustained demand for Nvidia GPUs in data center build-outs.
1. Capital Return Proposal
Bank of America analysts argue Nvidia’s near-zero dividend yield of 0.02% excludes the stock from many income-oriented portfolios and widens its valuation gap. They recommend a yield increase to 0.5–1%, requiring $26–51 billion or 15–30% of projected 2026 free cash flow, to broaden the shareholder base and signal sustainable returns.
2. Valuation Discount Context
Nvidia trades at 26x and 19x 2026 and 2027 estimated P/E, roughly half the 49x and 41.5x averages of its Magnificent Seven peers. On a free cash flow basis, the company is valued at about 30% below Apple and Microsoft despite forecasts of over $400 billion in combined 2026–27 FCF.
3. Demand from AI Infrastructure Spending
Alphabet’s increase in AI infrastructure CapEx to $180–190 billion underscores robust data center investment that benefits Nvidia’s GPU sales. Sustained capital spending on cloud and AI workloads is expected to drive ongoing demand for high-performance computing solutions.