Nvidia’s Networking Engine Roars as Record Cash Returns Mask a Cautious Market
26.05.2026 - 12:52:46 | boerse-global.de
When hyperscalers go on a buying spree, Nvidia is the merchant of choice — and nowhere is that more evident than in its networking business, where revenue surged 199% year-on-year to $14.8 billion in the fiscal first quarter. The segment, often overshadowed by Nvidia’s GPU dominance, is now a critical growth engine as cloud giants race to link thousands of accelerators inside their AI clusters. CFO Colette Kress disclosed that every major hyperscaler is deploying Nvidia’s Arm-based Vera CPUs, helping the company target nearly $20 billion in CPU revenue this year — a figure that would catapult Nvidia into the top tier of data-centre processor vendors.
The headline numbers from the quarter ended April 30 were staggering by any measure. Revenue hit $81.6 billion, up 85% from a year earlier, while adjusted earnings per share of $1.87 comfortably beat the $1.76 consensus. Free cash flow swelled to $48.6 billion, roughly double the prior year’s level, and net income reached $58.3 billion for the quarter alone. The data-centre division contributed $75.2 billion of the total, a 92% jump, with networking accounting for a growing slice of that pie.
On the back of that cash machine, Nvidia delivered a record capital return: the quarterly dividend was lifted from one cent to 25 cents per share — a 2,400% increase that translates into an annual payout of about $24.3 billion. More eye-catching was the new $80 billion share buyback programme, authorised on 18 May, which, combined with leftover capacity from the previous plan, gives Nvidia $118 billion in total repurchase firepower. In the first quarter alone, the company returned $20 billion to shareholders, the largest quarterly distribution in its history.
Should investors sell immediately? Or is it worth buying Nvidia?
Yet the market’s response has been muted at best. The stock traded at €186.88 in European session, down roughly 1% on the day and about 7% below its all-time high in mid-May. It now sits roughly 6% below its 52-week peak. This pattern has become routine: Nvidia has not posted a gain on the day following any earnings release since the spring of 2025, even as the shares have rallied more than 60% over that same period. Profit-taking after a breathtaking run, analysts say, is nothing new.
For the current quarter, management guided for revenue of approximately $91 billion, well ahead of the $86.8 billion consensus. That forecast excludes all data-centre sales to China — a market CEO Jensen Huang has pegged at roughly $50 billion, revenues that are effectively off the table for the foreseeable future. The geopolitical cloud is a structural risk that weighs even as Nvidia’s core business fires on all cylinders. With a forward price-to-earnings multiple of around 30 times, valuation discipline remains a recurring caution from the Street.
Wall Street’s enthusiasm is undimmed: 62 analysts carry a consensus “Strong Buy” for the stock, while a separate poll of 42 analysts shows 40 recommending a purchase. Nvidia has beaten earnings estimates in 22 of the past 24 quarters, a track record that gives the bulls ample cover. The next test comes in August, when second-quarter results will show whether the $91 billion guidance can be met — and whether the China dilemma ever gets a softer landing.
Ad
Nvidia Stock: New Analysis - 26 May
Fresh Nvidia information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
