Nvidia and Broadcom are demonstrating exceptional cash generation, with Nvidia reporting $43 billion in cash from operations in H1 FY26 and Broadcom $7 billion in free cash flow in its latest quarter, both propelled by surging demand in the AI market. These semiconductor giants are capitalizing on the projected 40-55% annual growth of the AI sector by returning substantial capital to shareholders through dividends and share repurchases. This includes Nvidia's new $60 billion buyback authorization and Broadcom's consistent dividend increases, highlighting their strong financial performance driven by the AI megatrend.
Key PointsNvidia generated a staggering $43 billion in cash from operations during the first half of its fiscal year. Broadcom produced $7 billion of free cash flow in its most recent quarter. Both companies are returning their growing windfalls to shareholders. - 10 stocks we like better than Nvidia › Nvidia generated a staggering $43 billion in cash from operations during the first half of its fiscal year. Broadcom produced $7 billion of free cash flow in its most recent quarter. Both companies are returning their growing windfalls to shareholders. The AI market is booming. Bain projects the total addressable market for AI hardware and software will grow 40%-55% annually, reaching $780 billion to $990 billion by 2027. This growth is enabling companies that provide AI tools, such as chips for data centers, to benefit as demand surges for infrastructure supporting AI applications. Nvidia (NASDAQ: NVDA) and Broadcom (NASDAQ: AVGO) stand out as early leaders of the AI megatrend. They're turning into cash-flow machines. Both are producing such an abundance of cash that they're returning most of their growing windfalls to shareholders. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » 1. An AI-powered cash-flow machine Nvidia pioneered GPU-accelerated computing, a technology that leverages specialized semiconductors and algorithms to enhance the speed of compute-intensive operations within applications. This advanced technology is crucial for supporting innovations like AI and robotics. Unsurprisingly, AI-focused tech companies have been snapping up Nvidia's AI semiconductors to turn data centers into supercomputers. The semiconductor company generated $46.7 billion of revenue in its recently completed fiscal 2026 second quarter. That was up 6% from the first quarter and 56% from the year-ago period. The bulk of those sales were to data center customers ($41.1 billion). Nvidia's AI semiconductor platform has become a cash-printing machine. During the first half of its 2026 fiscal year, the company generated nearly $43 billion in cash from operations -- up from almost $30 billion during the year-ago period. Of that cash, Nvidia returned $24.3 billion to investors via dividends and share repurchases. Despite this massive cash return, the company still had nearly $57 billion in cash on its balance sheet at the end of the period. Nvidia plans to keep returning cash to investors. With only $14.7 billion remaining on its buyback authorization at the end of the second quarter, Nvidia's board in late August added another $60 billion for share repurchases. Meanwhile, there's more AI-powered growth ahead for Nvidia. The company's Blackwell platform is becoming the gold standard in AI. Blackwell data center sales surged 17% sequentially in the second quarter and should continue growing briskly in the future as more companies adopt this technology. 2. The AI-powered accelerator Broadcom has also been cashing in on the AI race. The infrastructure software and semiconductor company reported a 22% year-over-year increase in its revenue in its fiscal third quarter of 2025, pushing it to a record $16 billion. AI revenue growth accelerated in the period, surging 63% to $5.2 billion. The company generated nearly $7.2 billion in cash from operations during the period. The capital-light business spent only $142 million on capital expenses, enabling it to produce over $7 billion in free cash flow, representing an impressive 44% of its revenue. Free cash flow has surged 47% over the past year. Broadcom returned $2.8 billion of that cash to investors via dividends. The company previously increased its dividend by 11% for this fiscal year, marking its 14th consecutive year of dividend increases since initiating the payout in fiscal 2011. The semiconductor company also authorized a $10 billion share repurchase program earlier this year, $4.2 billion of which it bought back in its fiscal second quarter. Even with those robust cash returns, Broadcom ended its fiscal third quarter with nearly $11 billion of cash on its balance sheet. The company's robust cash flow should continue growing. Broadcom expects its AI semiconductor revenue to accelerate to $6.2 billion in its fiscal fourth quarter, pushing its total revenue up to $17.4 billion in the period. That should further boost its free cash flow, providing Broadcom with more funds to return to shareholders. The semiconductor giant will likely give its investors another sizable raise later this year when it announces its annual dividend increase, and extend its growth streak to 15 years in a row. Cashing in on the AI megatrend Surging global investment in AI semiconductors is transforming Nvidia and Broadcom into cash-flow machines. Their ability to convert massive AI-driven revenue into cash is allowing them to return more money to investors through dividends and buybacks. With their cash printing presses unlikely to slow down anytime soon, they're potentially compelling investment opportunities for those seeking companies cashing in on the AI megatrend. Should you invest $1,000 in Nvidia right now? Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $621,976! Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,150,085! Now, it’s worth noting Stock Advisor’s total average return is 1,058% — a market-crushing outperformance compared to 191% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor. Stock Advisor returns as of September 29, 2025 Matt DiLallo has positions in Broadcom. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Nvidia and Broadcom are materializing as primary beneficiaries of the artificial intelligence boom, converting rapid top-line growth into substantial free cash flow and shareholder returns. Nvidia posted a 56% year-over-year revenue increase to $46.7 billion in its fiscal Q2 2026, driven predominantly by its data center segment which accounted for $41.1 billion. This translated into nearly $43 billion in cash from operations in the first half of the fiscal year, a significant increase from the almost $30 billion generated in the prior-year period. The company is aggressively returning capital, having deployed $24.3 billion for dividends and repurchases in H1 and adding a new $60 billion buyback authorization. Similarly, Broadcom's AI-related revenue surged 63% to $5.2 billion in its fiscal Q3 2025, contributing to a record $16 billion in total revenue. The company's capital-light model enabled it to convert this into over $7 billion of free cash flow, representing a 44% margin, and fueling its 14th consecutive year of dividend increases. Both firms' robust cash generation and commitment to shareholder returns, underscored by strong forward guidance and the projected 40%-55% annual growth of the AI market, signal significant confidence in the durability of this secular trend.
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