The artificial intelligence sector is experiencing rapid expansion. According to Bain, the total market size for AI hardware and software is expected to increase by 40%-55% each year, potentially reaching between $780 billion and $990 billion by 2027.
This surge is creating significant opportunities for companies supplying AI solutions, such as data center chip manufacturers, as the need for AI-supporting infrastructure rises. Nvidia ( NVDA -0.77%) and Broadcom ( AVGO -0.00%) have emerged as frontrunners in this AI revolution. These companies are generating substantial cash flows, so much so that they are distributing a large portion of their increasing profits back to shareholders.
Image source: Nvidia.
1. A cash-generating powerhouse fueled by AI
Nvidia was a trailblazer in GPU-accelerated computing, utilizing specialized chips and advanced algorithms to boost the performance of demanding applications. This innovation is essential for breakthroughs in AI and robotics. As a result, technology firms focused on AI have been acquiring Nvidia’s AI chips to transform their data centers into high-performance supercomputers.
In the most recent fiscal 2026 second quarter, this chipmaker reported $46.7 billion in revenue, marking a 6% increase from the previous quarter and a 56% jump compared to the same period last year. The majority of these earnings—$41.1 billion—came from data center clients.
Nvidia’s AI chip platform has become a major source of cash. In the first half of its 2026 fiscal year, Nvidia generated close to $43 billion in operating cash flow, up from nearly $30 billion a year earlier. Of this, $24.3 billion was returned to shareholders through dividends and stock buybacks. Even after these significant payouts, Nvidia still held almost $57 billion in cash at the end of the period.
Nvidia intends to continue rewarding its shareholders. With only $14.7 billion left in its buyback program at the end of the second quarter, the company’s board approved an additional $60 billion for share repurchases in late August.
Looking ahead, Nvidia is poised for further AI-driven expansion. Its Blackwell platform is quickly becoming the benchmark in AI technology. Sales of Blackwell data center products climbed 17% sequentially in the second quarter and are expected to maintain strong growth as more organizations implement this solution.
2. Accelerating growth with AI
Broadcom is also capitalizing on the AI boom. The company, which specializes in infrastructure software and semiconductors, saw its revenue rise by 22% year over year in the fiscal third quarter of 2025, reaching a record $16 billion. Revenue from AI-related products soared 63% to $5.2 billion during the same period.
During this quarter, Broadcom generated nearly $7.2 billion in operating cash flow. With just $142 million spent on capital expenditures, the company was able to produce over $7 billion in free cash flow, accounting for an impressive 44% of its revenue. Over the past year, free cash flow has increased by 47%.
Broadcom distributed $2.8 billion of this cash to shareholders through dividends. The company also raised its dividend by 11% for the current fiscal year, marking the 14th consecutive annual increase since it began paying dividends in 2011. Earlier this year, Broadcom authorized a $10 billion share buyback program, repurchasing $4.2 billion worth of shares in the fiscal second quarter. Despite these significant returns, Broadcom finished the fiscal third quarter with nearly $11 billion in cash reserves.
The company’s strong cash generation is expected to persist. Broadcom projects its AI chip revenue will climb to $6.2 billion in the fiscal fourth quarter, boosting total revenue to $17.4 billion for the period. This should further enhance its free cash flow, giving Broadcom even more resources to return to investors. The company is likely to announce another substantial dividend increase later this year, extending its streak of annual raises to 15 years.
Profiting from the AI boom
The global surge in investment in AI chips is turning Nvidia and Broadcom into major cash generators. Their ability to turn soaring AI revenues into cash allows them to increase payouts to shareholders through dividends and buybacks. With their strong cash flows showing no signs of slowing, these companies may present attractive opportunities for investors looking to benefit from the AI trend.
