Nvidia’s Cash Pile Nears $400 Billion, and BofA Says the Payout Question Is the Next Catalyst

Nvidia stock surges 23% in 30 days. Bank of America sees dividend upside, while $700B hyperscaler spending and strategic bets on 6G and AI infrastructure fuel the next leg.

Nvidia’s stock has been on a tear, gaining roughly 23 percent over the past 30 days to trade just shy of €179. But beneath the surface of this rally, a different narrative is taking shape — one that has less to do with chip architecture and more to do with what the company does with its mounting cash hoard.

Bank of America Securities analyst Vivek Arya reiterated his buy rating on April 27 with a $300 price target, arguing that shareholder returns, not just silicon design, will drive the next leg of the stock. Nvidia’s current payout ratio of 47 percent sits well below the industry average of roughly 80 percent. Arya sees room for a dividend yield between 0.5 and 1 percent, which would consume 15 to 30 percent of the projected free cash flow — a figure that could hit $400 billion over the next two years.

Valuation Looks Reasonable Despite the Run

Even after the recent surge, Nvidia’s valuation remains relatively modest. Based on fiscal 2027 earnings estimates, the stock trades at a price-to-earnings ratio below 20 — roughly half the average for the rest of the Magnificent Seven. The PEG ratio of 0.63 is also far below the sector median of 4.87, suggesting the market has yet to fully price in the pace of growth.

On May 20, the company will report results for its first fiscal quarter. Management has guided for revenue of around $78 billion, with the data-center segment — the key focus for analysts — expected to contribute $71 billion. That would follow a 73 percent revenue jump in the prior quarter, a comparison made easier by the year-ago drag from U.S. export restrictions on China.

Infrastructure Buildout and Strategic Bets

Nvidia is also deepening its technological footprint. A 2.9 percent stake in Nokia — roughly 166 million American depositary receipts worth over $1 billion — is aimed at developing AI-powered 6G networks and integrating Nvidia’s CUDA platform into Nokia base stations. Separately, a partnership with Google Cloud is building out infrastructure that could house up to 960,000 GPUs.

The real tailwind comes from the hyperscalers. Alphabet, Meta, and Amazon are planning combined investments of roughly $700 billion in hardware and data centers by 2026. That spending spree is already reshaping the chip landscape. Intel’s surprise first-quarter earnings beat, for instance, lifted the entire sector — because server processors and AI graphics chips are increasingly bought together. The logic is simple: any expansion in data centers benefits both companies.

A Tale of Two Markets

The chip market is splitting into two tiers. Tech giants like Microsoft, Google, and Meta are securing the bulk of Nvidia’s supply, rapidly building out their own capacity. Smaller AI startups, by contrast, face long wait times and high prices. That concentration gives Nvidia reliable revenue streams but also concentrates risk — a dynamic that favors the chip designer even as it squeezes smaller developers.

Nvidia’s market capitalization briefly crossed the $5 trillion threshold on April 24. The consensus among the 42 analysts covering the stock is “Strong Buy,” with an average price target of $273.57 — implying roughly 31 percent upside from the most recent close.

Insider Sales and the Dividend Question

One cautionary note: over the past 90 days, insiders including EVP Ajay Puri and director Mark Stevens have sold nearly one million shares. Such transactions often follow pre-arranged trading plans and don’t necessarily signal a bearish view. More consequential, analysts say, will be whether Nvidia announces a higher payout at its next shareholder meeting.

Looking further ahead, Nvidia’s new Rubin architecture is expected to launch in the second half of 2026. Company executives see annual data-center spending potentially exceeding $3 trillion by 2030. Because these facilities take years to build, the associated chip orders will flow in over a prolonged period — giving Nvidia a multiyear growth runway that keeps Wall Street firmly in the bullish camp.