Nvidia to Out-Earn Apple and Microsoft Combined

Nvidia could generate over $400 billion in free cash flow over the next two years, surpassing Apple and Microsoft combined, according to Bank of America analyst Vivek Arya. Despite this, Nvidia trades at a roughly 50% discount to Magnificent 7 peers on forward earnings and a 66% discount on enterprise value-to-free-cash-flow metrics. Arya argues Nvidia should boost buybacks and raise its dividend yield from 0.2% to between 0.5% and 1%, costing $26 to $51 billion, just 15% to 30% of projected 2026 free cash flow. Competition from AMD and custom chipmakers is rising, but Nvidia's CUDA software ecosystem remains a formidable barrier to switching.