By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
Panelists debate the sustainability of Nvidia's growth, with some citing 'circular financing' and supply bottlenecks as risks, while others argue that sovereign backing ensures demand and mitigates these issues.
Risk: Circular financing model and potential ROI disappointment on AI infrastructure
Opportunity: Sovereign backing and potential acceleration of memory supply via government intervention
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
The latest quarterly results from Nvidia, the world's most valuable publicly traded company with a market capitalization above $5 trillion, are in.
Nvidia (NVDA) reported second-quarter revenue of $96.22 billion and adjusted earnings of $2.22 per share after the closing bell today. Both numbers were better than the Street expected: Analysts were looking for earnings of $2.10 per share on $92.37 billion in revenue. The company's $108 billion guidance for third-quarter revenue was higher than Visible Alpha's analyst consensus.
"The AI infrastructure buildout is at full steam," CEO Jensen Huang said in prepared comments.
Nvidia shares rose in after-hours trading after falling, perhaps a signal that they continue to buy the company's growth story despite concerns about the financial health and longevity of the AI buildout. (Read Investopedia's full coverage of today's trading here.) Traders expect the stock could log a substantial move by the end of the week.
Nvidia's shares finished the first half of 2026 up a bit more than 7%, trailing the S&P 500, but as of Wednesday's close, they were up more than 12% year-to-date, narrowly outperforming the benchmark index. The shares ended today around $210 after falling 1.6% in the regular session; their record high, last seen in May, was above $236.
Kara Greenberg contributed to this article.
AUGUST 26, 2026 AT 10:43 PM GMT
Nvidia Reports Long List of Vera Rubin Customers
Nvidia's Vera Rubin, the successor to Blackwell, is off to a strong start, CFO Colette Kress said on Wednesday's conference call.
Kress said the company has received orders from "every major hyperscaler, AI cloud, and system OEM," or original equipment manufacturer, for the next-generation computing platform, which kicked off production shipments earlier this month.
"We expect Vera Rubin to mark the fastest product ramp in Nvidia's history," she said, and account for about 20% of Nvidia's data center revenue in the current quarter.
—Kara Greenberg
AUGUST 26, 2026 AT 10:38 PM GMT
Revenue Seen Growing 70% Next Year
CFO Colette Kress said Nvidia sees revenue growing approximately 70% in the next fiscal year, though it remains constrained by supply bottlenecks amid a shortage of memory parts.
"Our demand is much higher than that," Huang told analysts, "so I'm going to need the help of the entire supply chain to help me out here."
—Kara Greenberg
AUGUST 26, 2026 AT 10:22 PM GMT
Huang Says He Regrets Not Investing More in OpenAI, Anthropic
Jensen Huang said he expects OpenAI and Anthropic, which are both major customers of Nvidia, "to be customers and partners of ours for a very long time."
"I think the only regret that I have is that I didn't invest more and sooner," the Nvidia CEO said on Wednesday's conference call. The two AI giants are expected to go public soon, and Huang said he expects them to become "some of the most consequential technology companies in history."
Technology analyst Luke Lango, publisher of Innovation Investor, attributed the initial decline in Nvidia's share price following the blockbuster results to a slowing growth outlook.
Year-over-year revenue growth accelerated for five consecutive quarters, reaching 106% in the second quarter, but Nvidia's guidance for the third quarter points to growth in the mid-to-high 80% range, Lango noted. Sequential growth—quarter to quarter—is also expected to decelerate.
"So, any way you slice it, the growth story is slowing," Lango wrote in an email. "But the bulls will argue, and rightly so, that NVDA stock is not priced for perfection, with the forward earnings multiple around 18X and essentially near 5-year lows."
"And the broader thesis is intact: $89B in quarterly Data Center revenue, compute commitments jumping from $119B to $279B in one quarter, and $500B+ in new financing partnerships ... all say the AI buildout itself isn't slowing," he said. "What's in question is Nvidia's rate of capture within that cycle — worth watching, but not thesis-breaking."
—Stephen Wisnefski
AUGUST 26, 2026 AT 09:42 PM GMT
Memory Supply Could Still Be a 'Bottleneck' Next Year
Nvidia said memory supply issues aren't likely to go away soon.
"Although we will work to close the supply demand gap, we expect supply to remain a bottleneck, at least through the end of fiscal year 28," said CFO Colette Kress on the company's conference call.
"We have long-standing, deep relationships with all three major memory suppliers, and we're working closely with them to further increase the capacity," she said.
Nvidia Colette Kress acknowledged investor concerns about the company's financial support of its customers on Wednesday.
"We recognize the scale of this support, and we know some will call this circular financing. We see it differently," Kress told investors on the company's earnings call.
"These are once-in-a-generation companies, the technology leadership is proven, and their customer traction and usage are skyrocketing," she said. "We expect them to become the largest technology companies in history."
—Kara Greenberg
AUGUST 26, 2026 AT 09:30 PM GMT
Nvidia Puts More Cash on the Line to Secure Memory Supply
Nvidia's supply and capacity commitments through 2032 have grown to $279 billion from $119 billion "primarily related to the procurement of memory," CFO Colette Kress said in commentary released with the results, as prices surge amid a global shortage of parts.
The CFO said those commitments will peak at $92 billion this fiscal year, and fall to $87 billion next year.
The company also expects its equity investments and capital expenditures to peak this year at $18 billion and $7 billion, respectively.
—Kara Greenberg
AUGUST 26, 2026 AT 08:46 PM GMT
Third-Quarter Revenue Forecast Tops Projections
Nvidia said it sees third-quarter revenue coming at $108 billion, ahead of the $105.39 billion analysts tracked by Visible Alpha anticipated.
Its forecast for adjusted operating expenses, $9.0 billion, was a bit above the $8.93 billion analysts currently expect.
—Kara Greenberg
AUGUST 26, 2026 AT 08:43 PM GMT
AI Demand 'Is Accelerating,' Jensen Huang Says
Demand for AI is increasing, Nvidia CEO Jensen Huang said Wednesday.
"Demand is accelerating," he said in prepared statements. This time last year, one lab alone was driving the buildout; today, we have a golden age of new AI labs and startups, multiple frontier labs scaling in parallel, a thriving open-model ecosystem and physical AI coming online—with strong momentum across the U.S. and around the world."
"The AI infrastructure buildout is at full steam," Huang said.
AUGUST 26, 2026 AT 08:40 PM GMT
Nvidia Spends $26B on Buybacks, Dividends in Q2
Nvidia spent about $26 billion on buybacks and dividends in the second quarter, the company said.
The company said it has about $99 billion remaining in authorized buybacks.
Nvidia's next dividend, of 25 cents per share, will be paid on Oct. 1 to shareholders of record as of Sept. 10, the company said.
Some analysts have called for the company to increase its shareholder return expenditures.
AUGUST 26, 2026 AT 08:36 PM GMT
Gross Margins In Line With Estimates, But Seen Sliding in Q3
Nvidia's gross margin for the second quarter met market expectations at 75%, up from around 72.4% a year ago. Operating expenses jumped 55% in the quarter.
Nvidia said it expects gross margin to fall to 74% in the current quarter, however, give or take 50 basis points.
—Kara Greenberg
AUGUST 26, 2026 AT 08:35 PM GMT
Data Center Revenue More Than Doubles From Year Ago
Nvidia's data center sales, which accounted for the bulk of its revenue, jumped 117% from a year ago to a record $89 billion. Analysts had called for $85.90 billion.
Edge computing revenue, a category that includes Nvidia's automotive, robotics, and gaming sales, climbed 27% year-over-year to $7.2 billion.
—Kara Greenberg
AUGUST 26, 2026 AT 08:30 PM GMT
Nvidia's Profits Top Estimates, Sales More Than Double
AI chipmaker Nvidia posted adjusted earnings of $2.22 per share for the second quarter, well above the $2.10 analysts were looking for.
Revenue jumped 106% year-over-year to a record $96.22 billion. Wall Street was looking for $92.37 billion, according to estimates compiled by Visible Alpha.
The stock slipped slightly in after-hours trading.
—Kara Greenberg
AUGUST 26, 2026 AT 05:56 PM GMT
Shares of Nvidia's AI Hardware Partners Climb Ahead of Results
Shares of several AI hardware makers with ties to Nvidia are on the rise ahead of the chipmaker's results.
Arista Networks (ANET), an Nvidia partner that makes Ethernet switches and software for large data centers, was one of the best-performing stocks in the S&P 500 with shares up close to 5% recently.
Nvidia-backed Lumentum (LITE) surged 6%. Server maker Dell (DELL) also climbed, as did with hard drive leaders Seagate (STX) and Western Digital (WDC).
A strong showing from Nvidia could boost a wide range of stocks with ties to its business—that is, if the company can convince investors that demand is sustainable.
—Kara Greenberg
AUGUST 26, 2026 AT 05:47 PM GMT
Here's What Wall Street Expects From Nvidia's Top and Bottom Lines
Nvidia is projected to post adjusted earnings of $2.10 per share on a record $92.37 billion in second-quarter revenue, both roughly double what the company reported a year earlier.
Data center sales, which make up the lion's share of Nvidia's revenue, are seen coming in at $85.90 billion, up 109% year-over-year, according to estimates compiled by Visible Alpha.
The company is seen projecting adjusted EPS of $2.40 on revenue of $105.39 billion for the third quarter.
—Kara Greenberg
AUGUST 26, 2026 AT 04:45 PM GMT
On Subtack: Nvidia's Creative Financing Could Topple Everyone's Top Stock
The question of Nvidia's moves to help financially support its customers has raised questions for investors—which includes Investopedia Editor in Chief Caleb Silver, who tackled the topic earlier this week on Value Add, our new offering on Substack.
From his latest missive: What do you do when your customers don't have enough money to buy your essential product, and demand seems infinite? You offer them a line of credit, right?
Then what happens when they've maxed out their credit, but they believe they still absolutely need your product if they want to be in business next year? You still want them as a customer, so you get creative, and you call your favorite bankers to reach into their bag of tricks to come up with an exotic solution.
That's what Nvidia CEO Jensen Huang did recently when he pulled together a consortium of banks and private equity firms, including Apollo, Blackrock, Blackstone, Goldman Sachs and KKR, to provide a half-a-trillion-dollar capital pool to the chipmaker's customers.
While the details of this financing arrangement have yet to be revealed, it smells an awful lot like the mortgage-backed securities that were cooked up under the U.S. housing market in the 1970s. Don't take my word for it—that's exactly how Blackrock CEO Larry Fink described it.
Nvidia Should Boost Its Payout, Bank of America Says
Nvidia can boost its appeal to investors by boosting buybacks.
That's the take of the analysts at Bank of America, who in a Tuesday note reiterated a buy rating and a $350 price tag on the shares.
The bank's analysts said that based on Street estimates in 2027 and 2028, the company's payout "looks modest" at about 37% of projected free cash flow. They'd like to see that raised to as much as 75%, which "could offer real support."
"A buyback pivot toward Apple-style payouts is the underappreciated 2H and CY27 catalyst to re-rate the stock trading at a depressed multiple," they wrote. "More cash returned to investors also helps to reduce the risk overfunding the AI buildout which could extend the durability of the cycle."
AUGUST 26, 2026 AT 03:06 PM GMT
Nvidia Investor Questions Are 'Really About the Long Term,' Analyst Says
Ben Reitzes, head of technology research at Melius Research, says that Nvidia CEO Jensen Huang will need to clearly explain long-term trends on the post-earnings conference call.
"I think minutiae around the quarter might not be the key here, other than gross margins. If gross margins break due to memory costs, then there will be some concerns," Reitzes said during an interview Wednesday morning on CNBC. "Other than that, I think it's really about the long term and convincing folks this is sustainable."
Huang also must convince investors that a recently announced $500 billion financing platform—involving Wall Street heavyweights including Goldman Sachs and BlackRock, and using Nvidia chips as collateral—is a sensible plan.
"The Nvidia chips and infrastructure are lasting longer than people thought, and they're getting more economic value out of these chips for longer than people were thinking," Reitzes said. "So I do think [Huang] is creating a financeable asset class, and I think that that needs to be explained better."
"It needs to be explained better because, to the layman, it looks like circular financing," Reitzes said, referring to the flurry of deals where Nvidia invests in or provides financing to companies that in turn use the money to purchase Nvidia products.
"What I think's going to happen is that demand is going to go through the roof as token costs go down, and there's going to be more and more of a compute shortage, not less, and that bodes well for the financeable asset class at this stage in the cycle," Reitzes said.
—Stephen Wisnefski
AUGUST 26, 2026 AT 02:31 PM GMT
Here's How Much Nvidia Stock Is Expected to Move After Earnings
Traders expect a substantial swing in Nvidia's shares by the end of the week, according to options data:
Based on current options pricing, traders expect Nvidia shares could swing up to about 6% in either direction by the end of the week following the results. A move of that size from Tuesday's close could push the shares as high as $225, approaching their May record just above $236, or drag them back below $202.
Five Things Wall Street Analysts Will Be Watching in Nvidia Earnings
In the immediate aftermatch of Nvidia's Wednesday-afternoon earnigns release, the stock may trade on the numbers. But what else should investors be watching for?
Investopedia's Kara Greenberg gathered up five of the topics Wall Street analysts have said they hope to learn more about. You can read her full story here.
Four leading AI models discuss this article
"Nvidia is transitioning from a pure hardware seller to a shadow-banker for the AI ecosystem, which significantly increases balance sheet risk if customer ROI fails to scale."
Nvidia’s Q2 performance is a masterclass in operational excellence, but the market is rightfully jittery about the 'circular financing' model. While a 106% revenue jump is undeniable, the deceleration in growth guidance to the 80% range suggests we are hitting the law of large numbers. The real risk isn't the current quarter—it's the $279 billion in long-term supply commitments combined with financing AI customers. If the ROI on these Vera Rubin clusters doesn't materialize for the hyperscalers, Nvidia is essentially subsidizing its own demand. At an 18x forward P/E, the stock is cheap, but only if the 'financeable asset class' narrative holds up under scrutiny.
If Nvidia’s hardware truly becomes the foundational 'electricity' of the modern economy, the financing structure isn't a bubble—it's a necessary bridge to ensure the infrastructure gets built fast enough to capture the total addressable market.
"Nvidia's shift from selling chips to financing customer purchases signals the underlying demand story is weakening faster than headline growth suggests."
Nvidia beat on earnings and guidance, but the real story is deceleration. YoY revenue growth fell from 106% to mid-to-high 80s projected—a 20+ point cliff. Gross margins compress to 74% next quarter. Most concerning: $279B in supply commitments (up from $119B) are frontloaded to FY28, with memory bottlenecks persisting through FY28. The $500B customer financing consortium isn't a feature—it's a warning sign that end-customers can't self-fund the buildout. Nvidia is essentially financing its own demand, which masks whether underlying AI economics actually work. At 18x forward P/E, the market is pricing in deceleration, but not the risk that customer financing breaks if LLM ROI disappoints.
If token costs drop 50%+ as Huang implies, compute demand could explode, justifying the financing structure as a rational way to monetize a multi-decade cycle. Vera Rubin ramping as fastest product ever suggests supply constraints, not demand weakness.
"The key risk to the bull case is that longer-than-expected memory bottlenecks and the external financing framework create a credit/margin headwind that could blunt Nvidia's earnings power even as AI demand remains robust."
NVDA posted a blowout quarter, with Q2 revenue of $96.22B and adj EPS of $2.22, topping estimates and guiding Q3 at $108B. Data-center revenue hit $89B (up 117% YoY), reinforcing the AI infrastructure buildout thesis. But the article minimizes two big risks: memory bottlenecks look likely to persist through FY28, which could constrain supply to customers and pressure margins; and Nvidia's aggressive financing stance (roughly $279B in commitments) raises credit and counterparty risk if demand slows or financing sources tighten. If memory costs rise or the financing construct becomes problematic, the durability of the growth rally could face multiple compression pressures.
The optimism may prove too optimistic if memory supply constraints deepen or the financing framework triggers regulatory or counterparty risks, potentially diluting margins and capping upside.
"Supply constraints and customer financing exposure outweigh the headline beat, capping sustainable growth below the 70% target."
Nvidia's Q2 beat and $108B Q3 guide mask decelerating growth: revenue +106% YoY but next quarter mid-to-high 80s%, with supply bottlenecks expected through FY28. The $279B memory commitments and $500B customer financing platform signal demand strength yet introduce circular-financing risk and capex peaking at $18B this year. Vera Rubin at 20% of data center revenue this quarter is positive, but memory shortages and 74% Q3 gross margin guidance suggest margins could compress further if HBM prices keep rising. Shares at 18x forward earnings look cheap only if the 70% FY27 growth target materializes despite constraints.
The article underplays how quickly memory supply could normalize or how the $500B financing could accelerate adoption, turning today's bottlenecks into next year's volume upside and justifying re-rating above 20x.
"The financing model is a feature of geopolitical necessity, not a sign of weak end-market demand."
Claude and Gemini are fixated on 'circular financing' as a systemic risk, but you are all ignoring the sovereign mandate. AI infrastructure is becoming a national security asset; governments won't let these projects fail for lack of liquidity. This isn't just corporate capex; it's a global arms race. The financing isn't a 'warning sign'—it is the mechanism that ensures Nvidia remains the sole provider of the foundational compute layer for the next decade of geopolitical dominance.
"Geopolitical importance doesn't validate circular financing if the underlying AI ROI remains unproven."
Gemini's 'sovereign mandate' argument conflates geopolitical importance with financial viability—two different things. Yes, governments care about AI infrastructure. But that doesn't eliminate counterparty risk if hyperscalers can't generate positive ROI on financed clusters. Governments subsidize strategically important industries all the time; that's not proof the underlying economics work. The financing structure still needs end-customer cash flow eventually, or it becomes a government-funded transfer to Nvidia shareholders. National security doesn't repeal unit economics.
"Sovereign backing is not a free pass; policy/regulatory risk can erode ROI and render financing fragile, risking a late-stage re-rating."
Gemini's sovereign-mandate defense overplays liquidity as a cure-all. State backing can become politics risk: subsidies can shift, export controls tighten, and policy changes can strip financing tailwinds, leaving end-customers cash-flow-constrained and Nvidia stuck with fungible but decaying returns. If the ROI on Vera Rubin-scale infrastructure doesn't materialize, sovereign liquidity buys duration but not durability, risking a repricing of Nvidia once policy bears bite and financing becomes expensive.
"Sovereign mandates could subsidize HBM production, shortening supply bottlenecks and supporting Nvidia's growth targets."
ChatGPT flags policy shifts as a new risk from sovereign backing, yet this ignores how national security priorities could accelerate memory supply via direct subsidies to HBM makers like Samsung. Such intervention might resolve bottlenecks before FY28, supporting Nvidia's 70% FY27 growth target and easing the 74% margin compression. Claude's unit economics critique weakens if governments underwrite the infrastructure buildout.
Panelists debate the sustainability of Nvidia's growth, with some citing 'circular financing' and supply bottlenecks as risks, while others argue that sovereign backing ensures demand and mitigates these issues.
Sovereign backing and potential acceleration of memory supply via government intervention
Circular financing model and potential ROI disappointment on AI infrastructure