AAPL
MSFT
NVDA
New excuse for the rally
BofA Securities isn’t changing its tune on Nvidia — it’s doubling down. The firm reiterated a Buy rating and a $300 price target, arguing the next upside driver isn’t another shiny AI product cycle. It’s the boring-but-beautiful world of dividends and buybacks.
Cash flow goes brrr
According to BofA, Nvidia could cough up more than $400 billion in free cash flow across CY26-CY27. That’s the kind of number that makes even Apple and Microsoft look like they’re sharing a lunch table with the big kid. The bank says Nvidia trades at a big discount to Magnificent 7 peers on earnings and free cash flow — despite having one of the strongest money-printing machines in tech.
The shareholder-return glow-up
The real gripe? Nvidia has been keeping too much of that cash under the mattress. BofA says the company returned just 47% of free cash flow to shareholders in CY22-25, well below peers and below Nvidia’s own historical pace.
If management decides to get a little more generous, BofA thinks Nvidia could support a 0.5% to 1% dividend yield without breaking a sweat. That would be a very different vibe from today’s 0.02% yield — less “thanks for being here,” more “we value you, please stay.”
What could cramp the style?
There are a couple of speed bumps:
- Nvidia already makes up a hefty chunk of the S&P 500, which may limit how much more passive money can pile in.
- AMD, Broadcom, Google, and Amazon are all building their own AI alternatives, so the moat is getting poked at from several directions.
Still, BofA thinks Nvidia can keep 70%+ of AI value share, helped by strategic prepayments and a giant software ecosystem. So yes, the AI party is still on — but the afterparty may now include a dividend announcement.
Big picture: Nvidia doesn’t need to prove it can grow anymore. It now has to prove it can share the spoils — and Wall Street seems pretty into that idea.