Analysts have identified a new driver for Nvidia's stock growth. It once helped Apple

Evercore ISI believes that more generous dividends and Nvidia’s share buybacks could become a new driver for its stock—just as they did for Apple. The chipmaker plans to return at least 50% of its free cash flow to shareholders, and since the beginning of the year, that figure has already reached 60%, according to Yahoo Finance.

During a conference call following the release of its quarterly earnings report, Nvidia’s management stated that the company intends to increase the amount of capital returned to shareholders, but did not provide specific figures. Last quarter, the chipmaker returned a record $26 billion to shareholders: $20 billion through share buybacks and another $6 billion in quarterly dividends of $0.25 per share, according to Yahoo Finance.

Evercore analyst Mark Lipasis forecasts that the company will return $115 billion to shareholders in 2026 and $230 billion in 2027. He believes this will lead to an increase in the P/E ratio—which measures the relationship between a stock’s price and its expected annual earnings—similar to what happened with Apple in 2015. At that time, after five years of decline, the P/E ratio began to rise as the company expanded its shareholder capital return program.

Nvidia CEO Jensen Huang previously called the emergence of generative AI the “iPhone moment” for the industry, and now Bank of America analyst Vivek Arya believes the company should “take that analogy to its logical conclusion” by increasing shareholder payouts, according to MarketWatch. From 2013 to 2025, Apple allocated 82% of its free cash flow to investors, which helped boost the market valuation of its shares, the BofA analyst agrees with his colleague at Evercore. He acknowledged that Nvidia’s situation is different, but the consensus forecast—which calls for returning 37% of free cash flow to shareholders—seems “modest” to him. An increase to 50–75% “could provide real support” for Nvidia’s stock, Arya wrote.

Yahoo Finance believes that Nvidia's financial results are more than sufficient to allow the company to increase its payouts.

Adjusted earnings per share for the previous quarter jumped 120% to $2.22, Revenue also more than doubled, reaching $96.2 billion, and this quarter could exceed $100 billion for the first time in the company’s history. The chipmaker expects revenue growth of 70% in the next fiscal year.

At the same time, Nvidia reported that its commitments for future shipments had soared from $119 billion to $279 billion, mainly due to the need to purchase expensive, hard-to-find memory chips, and warned of a decline in margins.

Nvidia also cited its debt burden as a risk factor in its financial statements, warning that an increase in liabilities could “adversely affect” its financial position and cash flows, according to CNBC. The company stated that $15 billion of its debt is due within one to five years. In its previous quarterly report, it had reported only $2.75 billion in debt maturing during that period.

“Servicing our debt, contractual restrictions, and additional debt issuances may result in us having to allocate a significant portion of our cash flows from operating activities to debt servicing and principal repayment,” the company’s report states.

Last quarter, Nvidia’s free cash flow fell from $49 billion to $21.4 billion and came in roughly half of analysts’ expectations, according to CNBC. Truist Securities analyst William Stein attributed this to an increase in accounts receivable, as Nvidia eased payment terms on many deals in which it acts as a financial backer. Paul Mix, head of technology research at Freedom Capital Markets, believes this is a temporary phenomenon linked to the aggressive rollout of the new generation of Vera Rubin processors, the TV channel reports.

On Thursday, August 27, Nvidia shares rose as much as 9.6% at their peak. If the gains hold through the close, the company will break a prolonged streak of price declines following the release of its earnings reports.

This article was AI-translated and verified by a human editor