Nvidia P/E Discount Persists as BofA Urges 0.5%–1% Dividend Yield
NVDA•Nvidia trades at 26x 2026 versus a 49x peer average, despite projecting over $400 billion free cash flow across 2026–27. Bank of America recommends boosting dividend yield from 0.02% to 0.5%–1%, requiring up to $51 billion to narrow its valuation gap with Apple and Microsoft.
1. Valuation Gap and Peer Comparison
Nvidia trades at 26x 2026 estimates and 19x 2027, nearly a 50% discount to its Magnificent Seven peers averaging 49x for 2026 and 41.5x for 2027 on a price-to-earnings basis.
2. Free Cash Flow Outlook
Analysts project Nvidia will generate over $400 billion in free cash flow across 2026 and 2027 combined, matching Apple and Microsoft yet trading at a lower market cap-to-FCF multiple.
3. Proposed Dividend Increase
Bank of America recommends raising Nvidia’s dividend yield from 0.02% to 0.5%–1%, which would require $26 billion to $51 billion in cash payouts and could broaden its investor base.
