How Has NVIDIA’s Story Changed?
NVIDIA (NVDA) stock is priced at 29.3 times earnings, against 21.5 for the S&P 500. Shareholders paying that premium need to know what they are buying, and here is the twist: the company’s priorities have changed. In May 2025, on its fiscal Q1 2026 call, management led with China and the export controls on H20, a chip it designed for that market. Now it leads with something else. So what is it?
NVIDIA Now Leads With Customer Financing
It is the money NVIDIA puts behind the companies that buy its chips. On its fiscal Q2 2027 call on August 26, 2026, management said NVIDIA has invested nearly $50 billion in frontier AI labs. It also announced partnerships with six infrastructure investors to set up financing platforms that will raise over $500 billion of outside capital.
NVIDIA goes further for NeoClouds, the newer cloud providers built for AI. It guarantees a minimum level of revenue on part of a NeoCloud facility’s capacity, and it takes a share of what the NeoCloud earns above that level.
The fiscal Q1 2026 call was about a different problem. Management said then that “the US government issued new export controls on H20”, and that NVIDIA could not ship $2.5 billion of H20 revenue that quarter. Back then, management was talking about sales NVIDIA was not allowed to make. Today it talks about sales NVIDIA helps its customers pay for.
How Big Is China Now, And Who Is Buying?
The Hopper 200 products NVIDIA shipped to customers in China were less than 1% of its data center revenue in fiscal Q2 2027. That revenue was $89 billion, up from $39 billion in the quarter of the lost H20 sales.
Management reports sales to the largest cloud providers separately from sales to its other customers. Sales to those other customers were $40 billion in fiscal Q2 2027, up 138% from a year earlier. The largest cloud providers still bought more, at $49 billion. But their purchases grew 13% from the previous quarter, against 25% for the other customers.
Is NVIDIA Safer Without China In Its Forecast?
On China, yes, but NVIDIA’s financing of its customers brings a risk of its own. Management said its forecast includes no data center chip revenue from China. That is reassuring, because NVIDIA cannot lose China sales it is not counting on. NVIDIA guided to revenue of $108 billion, plus or minus 2%, for fiscal Q3 2027, up from $96 billion in Q2.
The concern is that NVIDIA now pays for part of its own demand. Management said in August that it expects the AI labs it supports with its balance sheet to contribute roughly a quarter of its business in the following year. It also acknowledged that some will call this circular financing. Outside money looks more cautious. Reuters reported on October 1, 2026, that banks and investors seem to value NVIDIA’s chips, and the infrastructure around them, at less than NVIDIA does.
The fiscal Q3 2027 call is scheduled for November 17. One figure to follow then is how long NVIDIA waits to be paid. That wait rose to 60 days in Q2 as NVIDIA gave certain investment-grade customers longer payment terms on large purchases. If that figure rises again, it would suggest NVIDIA is relaxing payment terms further for customers.
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