Nvidia Reports Record Revenue Amid Circular Financing Concerns
Nvidia (NASDAQ: NVDA) announced a significant increase in revenue for its fiscal Q2 2027, reporting $96.2 billion, a 106% year-over-year rise, surpassing Wall Street’s expectation of $92.2 billion. The data center segment accounted for $89 billion of this total, growing at 117%. The company also projected a revenue growth of at least 70% for fiscal 2028, with earnings per share soaring by 120% to $2.22.
Despite this success, Nvidia’s reliance on circular financing—where it partially funds GPU sales to AI customers—raises concerns. About 25% of its projected fiscal 2028 revenue, estimated to exceed $670 billion, could come from customers financed by Nvidia itself, highlighting potential risks if the AI boom slows. Major buyers, including top hyperscalers like Microsoft and Amazon, are projected to spend $800 billion on AI infrastructure this year and $1.3 trillion the next, though smaller labs face financial hurdles.
This financial strategy could expose Nvidia to greater volatility, especially amidst the evolving AI landscape, prompting caution for investors. While Nvidia’s stock remains attractive and is currently valued at a P/E ratio of 34.9—lower than its 10-year average of 61.5—market watchers are advised to monitor developments closely regarding these financing agreements.
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