Chipmaker Nvidia (NVDA) has increased its dividend by an astounding 2,400%. But that hasn’t been enough to satisfy some investors.
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NVDS: built for a short position on NVDAThe maker of microchips and processors announced that it is increasing its quarterly dividend to $0.25 per share from $0.01 previously. Additionally, Nvidia announced a new $80 billion stock buyback program as it focuses on returning value to shareholders.
However, while the dividend increase is massive in percentage terms, it remains a pittance to many investors who have taken to social media to complain about the increase. Critics note that Nvidia’s dividend yield currently stands at a tiny 0.018% and say that a distribution of $0.25 per share is small potatoes considering Nvidia just reported a profit of $58.3 billion, up 211% from a year earlier.
High Expectations for Nvidia
Critics also grouse that Nvidia should be more generous with stockholders given that its first-quarter revenue of $81.62 billion was up 85% from a year earlier, and that the company now has a market valuation of $5.33 trillion, making it the world’s largest publicly traded concern.
Management also boasted that revenue in Nvidia’s AI data center unit doubled from a year ago to $75.2 billion in the latest quarter, and forecast $91 billion in sales for the current quarter. Disgruntled shareholders say this proves that Nvidia can afford to pay an even higher quarterly dividend.
Nvidia CEO Jensen Huang has acknowledged the calls for greater shareholder rewards, but has said that the company needs to reinvest its profits to drive its continued growth and meet global demand for its microchips and semiconductors that power AI workloads. Nvidia spent $6.04 billion on capital expenditures over the last 12 months.
Is NVDA Stock a Buy?
Nvidia’s stock has a consensus Strong Buy rating among 42 Wall Street analysts. That rating is based on 40 Buy, one Hold, and one Sell recommendations issued in the past three months. The average NVDA price target of $281.97 implies 26% upside from current levels. These ratings could change after the company’s financial results.
