By Angela Palumbo
Nvidia has become a cash king while hyperscalers bow away from that title as they continue to invest heavily in artificial intelligence.
Nvidia reported knockout financial results for its fiscal first quarter and better-than-expected second-quarter revenue guidance. Outside of those results, a notable part of Wednesday's results was impressive free cash flow that is helping the company make even more returns to shareholders.
The chip giant reported first-quarter free cash flow of $48.6 billion, an 86% increase from the $26.1 billion in the same period last year. This comes after Nvidia reported total fiscal 2026 free cash flow of $97 billion in February.
Nvidia's massive increase in free cash flow is especially notable when compared with that of its megacap tech peers.
Some of the largest tech companies in the world, like Microsoft and Alphabet, used to be asset-light, cash-generating machines. That has changed in recent years as these firms are focusing on expanding their cloud businesses and spending hundreds of billions of dollars to build out the infrastructure needed to power AI, like data centers.
Microsoft reported fiscal-third-quarter free cash flow of $15.8 billion on April 29, a 22% decrease from the prior year, "reflecting higher capital expenditures," CFO Amy Hood said on the company's earnings call. For the year, Microsoft expects about $190 billion to go toward capital expenditures.
Alphabet reported first-quarter free cash flow of $10.1 billion on April 29, down from $19 billion the prior year.
Amazon.com said when reporting first-quarter earnings on April 29 that free cash flow decreased to $1.2 billion for the trailing 12 months, compared with free cash flow of $25.9 billion in the year-ago period.
"In times of very high growth, like now, where the capex growth meaningfully outpaces the revenue growth, the early years' free cash flow is challenged until these initial tranches of capacity are being monetized and revenue growth outpaces capex growth," CEO Andy Jassy said on the earnings call. Amazon expects to spend $200 billion on AI in 2026.
Nvidia is reaping the benefits of all this AI spending. Hyperscalers are some of its largest customers, and have been public about partnerships with the chip giant. For example, in March, Amazon announced an expanded partnership between Nvidia and AWS, which included the deployment of over 1 million Nvidia graphic processing units across AWS Regions starting in 2026.
Demand for Nvidia's chips hasn't slowed down even as the major cloud companies have started building competing products. This is all benefiting shareholders.
As of the end of the first quarter, Nvidia had $38.5 billion remaining under its share repurchase authorization. On Wednesday, the board of directors approved an additional $80 billion. The company also increased its dividend to 25 cents a share from one cent a share, or 2,400%.
"Nvidia's sharp dividend hike and $80 billion buyback authorization signals its commitment to sustained profitability growth, shareholder returns, and confidence in the business long term," Ido Caspi, research analyst at Global X ETFs, wrote.
Nvidia is able to return value to shareholders while also making major investments in other companies, like OpenAI, Anthropic, CoreWeave, Lumentum Holdings, and many more.
"Nvidia is not a cash-strapped supplier stretching its balance sheet to keep customers afloat," Mark Malek, CIO at Siebert Financial, wrote. "It is the most profitable technology company on the planet, deploying surplus capital into an ecosystem it helped create, and collecting extraordinary returns along the way."
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 21, 2026 14:58 ET (18:58 GMT)
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