Nvidia's $118 Billion Capital Return: A Record Quarter and a Renewed Focus on Networking
26.05.2026 - 16:13:22 | boerse-global.de
Nvidia’s networking business is quietly stealing the spotlight. Revenue from the segment surged 199% year-over-year to $14.8 billion in the first quarter, far outpacing the 92% growth of the broader data center division. Hyperscalers are racing to build out massive AI clusters, and Nvidia is supplying not just the Grace Blackwell superchips but also the networking infrastructure that links them together. CFO Colette Kress noted that all major hyperscalers are already deploying the company’s Arm-based Vera CPUs, and Nvidia expects nearly $20 billion in CPU revenue this year — a figure that cements its standing as one of the largest data center CPU providers globally.
Data center revenue hit $75.2 billion, accounting for 92% of total sales. The overall top line climbed 85% to $81.6 billion in the fiscal first quarter of 2027, generating net profit of $58.3 billion. Free cash flow came in at roughly $48.6 billion, nearly double the year-ago level. That cash pile is being redeployed aggressively. Nvidia’s board authorized a new $80 billion share buyback program on May 18, with no expiration date. Combined with leftover authority from prior programs, the company now has around $118 billion in total repurchase capacity. In the first quarter alone, $20 billion flowed back to shareholders — the largest single-quarter return in corporate history.
The dividend is getting a dramatic upgrade, too. The quarterly payout jumps from $0.01 to $0.25 per share, a 2,400% increase. That works out to roughly $24.3 billion annually — still less than half of last quarter’s net profit. The ex?dividend date is June 4, with payment on June 26. For the full fiscal year 2026, management plans to return 50% of free cash flow to shareholders.
Should investors sell immediately? Or is it worth buying Nvidia?
Despite the historic capital return and record earnings, the market reaction was muted. Shares traded at around €188.90 in afternoon dealing, about 6% below the 52?week high reached in mid?May. The relative strength index sits at 39.5, suggesting a mildly oversold condition. Year to date, the stock is still up about 17%. This pattern has become familiar: Nvidia has not posted a gain on the day after any quarterly report since spring 2025, yet has rallied more than 60% over the same period.
Analysts see the sell?off as a case of expectations running ahead of reality. Evercore ISI’s Mark Lipacis draws a parallel with Apple, whose valuation multiple expanded steadily as it built a systematic capital return program. The thesis is that institutional investors reward consistent payouts with higher multiples over time. Nvidia’s price?to?earnings ratio of 30 based on forward earnings already sets a high bar, but the company’s record of 14 consecutive quarters of sequential growth gives management ample room to maintain both aggressive product investment and elevated shareholder distributions.
The guidance for the current quarter only adds fuel. Management expects revenue around $91 billion, topping the analyst consensus of $86.8 billion. That implies roughly 95% growth year?on?year, and the forecast excludes any China revenue entirely. The adjusted gross margin is pegged at about 75%, while adjusted earnings per share came in at $1.87 — a beat that extends Nvidia’s streak of outperforming expectations in 22 of the last 24 quarters. Of the 42 analysts covering the stock, 40 rate it a buy.
The next test will come when second?quarter results are released, showing whether the $91 billion target is within reach and whether China ever returns to the equation. For now, the combination of a networking revenue explosion, an $118 billion buyback arsenal, and a 25?fold dividend hike paints a picture of a company that has achieved rare scale — and is determined to reward the shareholders who bet on it.
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