Top News

• Nvidia has committed nearly $50 billion to frontier AI labs, and bets on strong returns and limited risk.
• Nvidia reported record Q2 sales and a 70% fiscal 2028 revenue growth forecast, triggering an overnight gain of over 5% in the stock.
• Stocktwits sentiment for NVDA was ‘extremely bullish.’

Nvidia Corp. on Wednesday addressed concerns that its investments in AI and cloud firms and the newly announced financing partnerships could amount to circular financing, arguing that the arrangements are necessary to help cash-strapped AI companies secure the computing infrastructure needed to meet surging demand.

“We see it differently,” CFO Colette Kress said, explaining that frontier AI labs are growing faster than their balance sheets and credit profiles can support. Their growth, she said, is increasingly constrained not by customer demand or technology, but by access to compute.

“We're going through a major computing platform shift, the creation of one of the most important technologies in human history,” Kress said. “We believe these investments measured against the strength of their demand, the business they create for us, the ecosystem they build on Nvidia's platform and the equity returns on our invested capital will be excellent, and our risk is limited.”

Nvidia has invested or committed nearly $50 billion in frontier AI labs, Kress said. She said the commitments are meaningful, but they represent only a small fraction of the company’s expected free cash flow over the same period.

Nvidia reported record sales of $96.2 billion for the May-July period and beat expectations for the 15th consecutive quarter. The chipmaker estimated a 70% jump in its fiscal 2028 revenue, all but silencing critics worried about an imminent slowdown in chip demand and Nvidia dominance in the space. 

NVDA stock rose 5.3% overnight following the report. On Stocktwits, retail sentiment for the stock shifted to ‘extremely bullish’ from ‘bullish.’

AI ‘Circular Financing’ Deals

Nvidia has invested in and struck major partnerships with AI companies that are among its biggest customers, creating a potentially circular dynamic: Nvidia provides capital to AI labs, those labs use the money and external financing to build data centers, and the infrastructure requires Nvidia’s GPUs.

It has either invested in or struck commercial agreements with OpenAI, Anthropic, Oracle, Intel, AMD, CoreWeave and Nebius, among others. 

The chipmaker is also working with six major infrastructure capital providers — Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR — to unlock $500 billion in financing support to companies looking to buy Nvidia chips.

The scale and structure of these arrangements have nevertheless raised concerns among investors about how much of Nvidia’s growth is being supported by the company itself rather than end-market demand.

Nvidia has pushed back on Wednesday, arguing that its investments help unlock much larger pools of institutional capital and enable AI labs to build infrastructure they otherwise could not finance.

The comments come as investors increasingly scrutinize whether the massive capital spending needed to build AI infrastructure can generate sufficient returns — and whether Nvidia’s financial commitments are helping sustain the spending boom that has driven its own record growth.

Nvidia Q2 Recap

Nvidia’s second-quarter revenue more than doubled to $96.2 billion, while adjusted net income came in at $2.22 per share.

Both metrics topped Wall Street expectations of $92.1 billion in revenue and $2.09 per share in adjusted earnings.

Nvidia’s flagship data center division drove most of the growth, contributing $89 billion versus average estimates of $85.8 billion. Hyperscalers such as Google and Amazon remained the primary drivers of the company's data center sales.

For the current quarter (Q3), Nvidia expects revenue of $108 billion, plus or minus 2%, ahead of the average analyst projection of $103.9 billion. Adjusted gross margins are forecasted to hold near 74%.

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