Happy Monday,
Last week, the most valuable company in the world reported earnings.
Nvidia ($NVDA) blew past both revenue and EPS estimates. They increased the dividend by 25x and tacked on an additional $80 billion to their share repurchase program.
Despite the beat, the stock quietly sold off more than 1% after hours.
Many people look at Nvidia's 1,394% return over the past 5 years and assume it’s wildly overvalued. But if you look past the stock price and weigh the fundamental data, the reality looks completely different.
Here is my deep dive into why Nvidia remains a stellar risk-adjusted buy in 2026 and beyond.
Stock Analysis
Why Nvidia Stock is a Buy in 2026 & Beyond
📈 The Financial Breakdown (Q1 2026)
Nvidia is building one of the heaviest balance sheets and cash-generating engines in human history:
Revenue: Hit $81.6 billion for the quarter—up 85% year-over-year from $44 billion.
Free Cash Flow (FCF): Generated an insane $48.6 billion this quarter alone (85% YoY growth). Its trailing 12-month FCF stands at $119 billion.
Margins: GAAP gross margins expanded to 74.9%, highlighting the immense pricing power Nvidia holds.
Earnings Per Share (EPS): Non-GAAP EPS surged to $1.87, up over 100% from $0.78 last year.
While Nvidia has historically maintained a tiny 1% payout ratio, management just signaled a massive shift in cash returns:
25x Dividend Raise: Nvidia is increasing its quarterly cash dividend from 1 cent per share to 25 cents per share.
$80 Billion Buyback: Management also tacked on an additional $80 billion to their share repurchase program.
Even with this 25x hike, Nvidia's rapid growth will likely push its forward dividend payout ratio back down below 5% to 10%. It is officially becoming a heavy, cash-returning business.
🔮 Why the Growth Won't Stop Anytime Soon
The bears often point to hyperscalers (Microsoft, Amazon, Google) building their own custom chips as a major threat. However, this risk is highly overstated for two reasons:
Unprecedented Demand: The hunger for compute is outstripping supply. Hyperscalers are still buying next-gen systems like Blackwell and the upcoming Vera Rubin as fast as Nvidia can package them.
Enterprise & AI Clouds: Nvidia's non-hyperscale segment (AI clouds like CoreWeave, industrial clusters like Eli Lilly) brought in $37.4 billion this quarter. CEO Jensen Huang noted that this enterprise segment faces zero custom-chip risk and is projected to grow faster than hyperscalers.
Nvidia isn't just selling chips; they design and deploy the entire data center infrastructure system.
📊 Valuation: Cheaper Than Coca-Cola?
At a post-earnings price of ~$220, Nvidia trades at roughly 27.5 times a conservative forward FCF (assuming they just repeat this quarter’s numbers without further quarterly growth).
The Takeaway: Nvidia is currently trading at a cheaper forward valuation than multiple low-growth consumer staple stocks (like Coca-Cola or Procter & Gamble), despite growing over 80% YoY.
Its forward PE sits at 26, placing it in the 25th–30th percentile of its historical valuation range over the past year.
🔑 My Personal Strategy
Will Nvidia pull off another 13x return over the next 5 years? No—that would make it a $70 trillion company. But it doesn't need to in order to have strong returns.
I don't own $NVDA in dividend growth portfolio, but it currently makes up 100% of my Roth IRA (recently built at a sub-$5 trillion market cap, currently up ~25%).
My back-of-the-napkin math says Nvidia is on a highly visible path to becoming a $10 trillion company by the end of 2027. I view it as a premier 1-to-2-year risk-adjusted investment to comfortably beat the S&P 500.
🛠️ Terminal 2.0 Sneak Peek
In the video, I tease the new version of DividendData.com. I have been working on this stock research platform every single day, and we are only a few weeks away from bringing it live to users!
If you want to be the first to test out the new charts, tools, and portfolio trackers, Join the Terminal 2.0 Waitlist Here.
Watch the full Nvidia Stock Analysis video: https://youtu.be/zo_ibTL38-A
Dividend News
🚀 Dividend Raises This Week
NVDA - Nvidia is increasing its quarterly cash dividend 2,500% from 1 cent per share to 25 cents per share.
RL - Ralph Lauren raises dividend by 9.6% to $1.00
LII - Lennox raises dividend by 4.6% to $1.36
HLNE - Hamilton Lane raises dividend by 11.1% to $0.60
WMS - Advanced Drainage Systems raises dividend by 11.1% to $0.20
BG - Bunge raises dividend by 3% to $0.72
GLPI - Gaming and Leisure Properties raises dividend by 5% to $0.82
EQH - Equitable raises dividend by 11% to $0.30
SBLK - Star Bulk Carriers raises dividend by 35% to $0.50 per share
LOGI - Logitech approves dividend increase to CHF 1.36 per share
UVV - Universal raises dividend by 1.2% by $0.83
HNI - HNI Corporation raises quarterly dividend by 2.9% to $0.35 a share
How did you like today’s newsletter?
📅 Keep Investing. Stay informed.
– Zach
Founder, Dividend Data
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Disclaimer: Dividend Dividend (Dividend Data LLC) is not a professional financial service. All materials released from Dividend Data (Dividend Data LLC) are for educational and entertainment purposes. Dividend Data (Dividend Data LLC) is not a replacement for a professional's opinion. Contributors to the Dividend Data (Dividend Data LLC) might have equities mentioned in the newsletter