Overview
- Bank of America, which issued a note Monday, said richer dividends or buybacks could drive the next move higher in Nvidia’s stock.
- Nvidia trades at roughly half the price-to-earnings multiple of its Magnificent Seven peers despite a market value near $5.08 trillion.
- The bank projects more than $400 billion in free cash flow across 2026 and 2027 and says a 0.5% to 1% dividend yield would cost about $26 billion to $51 billion, or 15% to 30% of expected 2026 cash flow.
- Nvidia’s dividend is about 0.02% and it returned 47% of free cash flow over the past three years, compared with about 80% for peers, which keeps many income funds on the sidelines.
- Potential limits include an 8.3% S&P 500 index weight that caps index-driven buying and rising competition from AMD and custom chips from Broadcom, Google, and Amazon.