By Rich Duprey
Publication Date: 2026-05-13 12:48:00
Quick Read
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Nvidia (NVDA) could generate over $400B in free cash flow over the next two years while trading at roughly a 50% discount to Magnificent 7 peers on forward earnings and a 66% discount on enterprise value-to-free-cash-flow metrics. The company returned 82% of free cash flow to shareholders between 2013-2022 but dropped to 47% from 2022-2025, with dividend yield at just 0.2% versus Apple (AAPL) at 0.4% and Microsoft (MSFT) at 0.8%.
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Nvidia’s valuation discount persists despite accelerating AI demand and cash generation because investors want clearer evidence that shareholder returns will scale with the company’s unprecedented free cash flow, a gap Bank of America argues could narrow if Nvidia increases buybacks and raises its dividend yield to between 0.5% and 1%.
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Artificial intelligence has become the market’s version of an industrial revolution. Every corner…
