Nvidia (NASDAQ: NVDA) stock‘s run throughout the artificial intelligence (AI) revolution is the kind of story people talk about like folklore. If you invested in Nvidia on Nov. 30, 2022 — the day OpenAI released ChatGPT to the public — shares closed around $16.87 on a split-adjusted basis. Given their current level around $225, that’s roughly a 1,230% gain. This would make a $10,000 investment at that time worth more than $132,000 today. That is not a typo.
The problem is Nvidia stock doesn’t feel like that multibagger trade anymore. The easy valuation expansion is gone because investors are hunting the next AI breakout candidate. That shift helps explain another headline: back in May, Nvidia raised its quarterly dividend from $0.01 to $0.25 a share — a 2,400% increase.
Missed AI’s “Act 1”? Act 2 Could Be 15x Bigger.Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout.Continue »
While the old dividend payout was a courtesy, the new one looks like an attempt to appeal to a broader shareholder base: pensions, passive income investors, or anyone else who needs a reason to stick around after the initial moonshot rally.
Nvidia’s massive dividend raise is still a small check overall
During Nvidia’s fiscal first-quarter earnings report, the company announced that its board of directors approved a dividend increase, making the first $0.25 payment on June 26 to holders of record as of June 4. Another $0.25 went ex-dividend on Sept. 10, payable Oct. 1.
Here’s the breakdown of cash that has actually left the building throughout Nvidia’s fiscal 2027. During the first quarter, the company was still on the penny dividend, paying about $243 million. After the raise, Nvidia’s dividend payout jumped to $6.0 billion in the second quarter. That is a real number in isolation, but next to the rest of the company’s capital-return program it is just a side dish.
Nvidia spent about $19 billion in Q1 and about $20 billion in Q2 on share buybacks. Management has said it wants to return 50% or more of free cash flow to shareholders, net of strategic uses. After adding an $80 billion repurchase authorization in May, roughly $99 billion was still available at the end of the second quarter.
So yes, Nvidia’s dividend got 25 times bigger. But for now, the company is using buybacks as the main driver of shareholder rewards.
