Here’s What BofA Thinks About ​NVIDIA Corporation (NVDA)

​NVIDIA Corporation (NASDAQ:NVDA) plays an important role in the quantum computing industry through its accelerated computing infrastructure and software platforms. For instance, the company integrates quantum processors with its AI supercomputers through tools like CUDA-Q, an open-source platform for hybrid quantum-classical applications, and NVQLink for seamless connectivity. The company also ranks as one of the Best Quantum Computing Stocks to Buy and Hold for 10 Years.

​On April 27, Vivek Arya from Bank of America Securities released a research note stating that NVIDIA Corporation (NASDAQ:NVDA) could be re-rated higher if the company ramps up cash returns to shareholders through bigger dividends or buybacks. The firm views this as a catalyst to attract more investors and fix what they call an unfair valuation discount.

​BofA elaborated that they expect the company to generate more than $400 billion in free cash flow from 2026 to 2027, which matches the free cash flow of Apple and Microsoft combined. However, despite this, the company trades at a 30% lower market cap to free cash flow multiple than its peers.

​Moreover, the firm also highlighted that NVIDIA Corporation (NASDAQ:NVDA)’s dividend yield is only 0.02%, which is negligible, and causes the stock to be left out of income-focused portfolios. BofA suggests that if the company increases its yield to 0.5% to 1%, similar to Apple and Microsoft, this could broaden the investor base and would only cost around 15% to 30% of the company’s 2026 free cash flow. Arya of BofA has a Buy rating on the stock without any price targets.

While we acknowledge the potential of NVDA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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