Nvidia's $48.5 Billion Quarterly Cash Gush Backs $80 Billion Buyback—Yet the Stock Stalls

Nvidia's $48.5B free cash flow and $80B buyback fail to impress; stock falls 4% amid China export fears and high valuations.

The numbers coming out of Santa Clara are staggering, even by Nvidia's own inflated standards. The chipmaker generated a staggering $48.5 billion in free cash flow in just three months—more than most companies make in a decade—and promptly unleashed an $80 billion share repurchase program alongside a 25-fold dividend hike. But the market response was anything but celebratory.

Cash machine in overdrive

Nvidia booked revenue of $81.6 billion for the quarter, a jump of 85% from the same period last year. The data center division remained the engine room, contributing $75.2 billion. Within that, networking revenue tripled, underscoring the breadth of demand for the company's full-stack AI infrastructure. The transformation into a cash-generating behemoth is complete: the free cash flow figure alone would cover the entire buyback in under two quarters.

The board didn't waste time rewarding shareholders. The quarterly dividend was raised to $0.25 per share—a 25-fold increase from the previous payout. The new $80 billion buyback authorization replaces or supplements earlier programs and signals management's confidence in the cash trajectory.

Guidance beats estimates, but China stays out

For the current quarter, Nvidia guided for roughly $91 billion in revenue, topping the average analyst forecast. Gross margin is expected to hold steady at about 75%. Yet the outlook contains a notable exclusion: it assumes no revenue from data center chips sold into China, where tightening export controls have effectively closed that market.

CEO Jensen Huang continues to push the expansion of AI factories. Demand for the current Blackwell-300 systems still outstrips supply, and management warns the bottleneck could persist for some time. The next hardware generation, the Vera-Rubin platform, remains on track for a production start in the third quarter of 2026. Meanwhile, Nvidia has begun shipping Dynamo 1.0, software that accelerates AI workloads on existing chips.

New reporting structure goes live

To give investors a clearer picture of its sprawling business, Nvidia is restructuring its segment reporting. The market will now be split between data center and edge computing, replacing the previous broader categories. The change reflects the growing divergence between cloud-scale deployments and on-device AI processing.

Stock slips as analysts hold the line

Despite the torrent of positive news, the stock lost ground. On the week, shares dropped 4.34%, closing at €185.46 on Friday. The daily decline was 1.66%, with the stock trading at €185.72. The current price sits just shy of the all-time high around €201, and the year-to-date gain still stands at a solid 15%—but the post-earnings drift has disappointed bulls.

Market observers point to sky-high expectations baked into the valuation as the culprit. Worries over further export restrictions and potential budget trimming by the big cloud hyperscalers added to the caution. Still, analysts are not flinching. Baird lifted its price target to $500, citing Nvidia's entrenched position in AI and deep partnerships with cloud providers. Out of 42 analysts covering the stock, 40 rate it a buy.

From a technical standpoint, the near-term test is the 50-day moving average. A hold above that line could cap the pullback, while a breakdown would put the 200-day average at €159.86 squarely in focus.

As the Vera-Rubin ramp approaches in the second half of 2026, the pressure is on Nvidia to execute a smooth scale-up. If it succeeds, the operational story provides the foundation for a fresh assault on the record high. For now, however, the market wants to see the next catalyst—and a $48.5 billion cash gush alone isn't enough to spark a rally.