The AI market is booming. Bain initiatives the overall addressable marketplace for AI {hardware} and software program will develop 40%-55% yearly, reaching $780 billion to $990 billion by 2027.
This progress is enabling corporations that present AI instruments, similar to chips for information facilities, to profit as demand surges for infrastructure supporting AI functions. Nvidia(NASDAQ: NVDA) and Broadcom(NASDAQ: AVGO) stand out as early leaders of the AI megatrend. They’re turning into cash-flow machines. Each are producing such an abundance of money that they are returning most of their rising windfalls to shareholders.
Picture supply: Nvidia.
Nvidia pioneered GPU-accelerated computing, a expertise that leverages specialised semiconductors and algorithms to reinforce the velocity of compute-intensive operations inside functions. This superior expertise is essential for supporting improvements like AI and robotics. Unsurprisingly, AI-focused tech corporations have been snapping up Nvidia’s AI semiconductors to show information facilities into supercomputers.
The semiconductor firm generated $46.7 billion of income in its not too long ago accomplished fiscal 2026 second quarter. That was up 6% from the primary quarter and 56% from the year-ago interval. The majority of these gross sales had been to information middle prospects ($41.1 billion).
Nvidia’s AI semiconductor platform has change into a cash-printing machine. Through the first half of its 2026 fiscal yr, the corporate generated almost $43 billion in money from operations — up from nearly $30 billion in the course of the year-ago interval. Of that money, Nvidia returned $24.3 billion to traders by way of dividends and share repurchases. Regardless of this large money return, the corporate nonetheless had almost $57 billion in money on its stability sheet on the finish of the interval.
Nvidia plans to maintain returning money to traders. With solely $14.7 billion remaining on its buyback authorization on the finish of the second quarter, Nvidia’s board in late August added one other $60 billion for share repurchases.
In the meantime, there’s extra AI-powered progress forward for Nvidia. The corporate’s Blackwell platform is changing into the gold normal in AI. Blackwell information middle gross sales surged 17% sequentially within the second quarter and may proceed rising briskly sooner or later as extra corporations undertake this expertise.
Broadcom has additionally been cashing in on the AI race. The infrastructure software program and semiconductor firm reported a 22% year-over-year enhance in its income in its fiscal third quarter of 2025, pushing it to a document $16 billion. AI income progress accelerated within the interval, surging 63% to $5.2 billion.
The corporate generated almost $7.2 billion in money from operations in the course of the interval. The capital-light enterprise spent solely $142 million on capital bills, enabling it to provide over $7 billion in free money stream, representing a powerful 44% of its income. Free money stream has surged 47% over the previous yr.
Broadcom returned $2.8 billion of that money to traders by way of dividends. The corporate beforehand elevated its dividend by 11% for this fiscal yr, marking its 14th consecutive yr of dividend will increase since initiating the payout in fiscal 2011. The semiconductor firm additionally approved a $10 billion share repurchase program earlier this yr, $4.2 billion of which it purchased again in its fiscal second quarter. Even with these strong money returns, Broadcom ended its fiscal third quarter with almost $11 billion of money on its stability sheet.
The corporate’s strong money stream ought to proceed rising. Broadcom expects its AI semiconductor income to speed up to $6.2 billion in its fiscal fourth quarter, pushing its complete income as much as $17.4 billion within the interval. That ought to additional increase its free money stream, offering Broadcom with extra funds to return to shareholders. The semiconductor large will probably give its traders one other sizable increase later this yr when it broadcasts its annual dividend enhance, and lengthen its progress streak to fifteen years in a row.
Surging world funding in AI semiconductors is remodeling Nvidia and Broadcom into cash-flow machines. Their potential to transform large AI-driven income into money is permitting them to return extra money to traders by means of dividends and buybacks. With their money printing presses unlikely to decelerate anytime quickly, they’re probably compelling funding alternatives for these in search of corporations cashing in on the AI megatrend.
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Matt DiLallo has positions in Broadcom. The Motley Idiot has positions in and recommends Nvidia. The Motley Idiot recommends Broadcom. The Motley Idiot has a disclosure coverage.
Dan Steven Erickson constructed a $650,000 retirement fund from a profession of primarily instructing. He additionally leveraged actual property investments…
