Nvidia returns record $26 billion to shareholders as AI demand drives record quarter

Nvidia has returned a record $26 billion to shareholders in its second fiscal quarter, a move that analysts suggest could serve as a significant catalyst for the stock. The total payout comprised $20 billion in share repurchases and a $6 billion dividend, equivalent to $0.25 per share. This distribution represents 60 per cent of the company’s free cash flow year to date, exceeding its initial plan to return at least 50 per cent to investors.

The results were underpinned by a record $96.2 billion in revenue, which surpassed the $92.3 billion expected by the market. Adjusted earnings per share came in at $2.22, beating the $2.09 consensus estimate. The data centre segment, which includes hyperscalers and AI clouds, generated $89 billion in revenue, more than doubling year-over-year and exceeding the projected $85.8 billion. Meanwhile, the edge computing division, which encompasses gaming and physical AI, contributed $7.2 billion, outperforming the $6.6 billion forecast.

Looking ahead, Nvidia projects fiscal third-quarter revenue between $105.8 billion and $110.1 billion, a figure that would mark the first quarter above the $100 billion threshold. The company also anticipates 70 per cent revenue growth for fiscal year 2028, significantly above the 45 per cent growth rate expected by analysts. CEO Jensen Huang noted that sales growth would have been even larger were it not for ongoing memory chip shortages, which have impacted component availability and pricing.

Market reaction to the earnings release was positive, with Nvidia shares climbing 6 per cent following the announcement. This gain comes after the stock had slightly underperformed the S&P 500’s year-to-date gain of approximately 14 per cent prior to the report. The upbeat outlook has reinforced investor confidence in the durability of artificial intelligence spending, suggesting the current boom is a sustained trend rather than a short-term spike.

Evercore ISI analyst Mark Lipacis forecasts that Nvidia will return $115 billion in cash to shareholders in 2026 and $230 billion in 2027. Lipacis suggested this increase in capital returns could lead to price-to-earnings multiple expansion, drawing a parallel to the trajectory of Apple’s valuation following its own capital return programme in 2015.

Jefferies analyst Blayne Curtis highlighted that supply commitments increasing to $279 billion strengthen confidence in Nvidia’s visibility. Curtis noted that despite a gross margin reset to 72.5 per cent, the company sees a clear path to $1 trillion in revenue, supported by robust AI infrastructure demand and higher revenue per gigawatt with its Rubin architecture.