Key Stats for Nvidia Stock
- Price change for Nvidia stock in last 6 months: -3%
- $NVDA Stock Price as of Oct. 23: $211
- 52-Week High: $243
- $NVDA Stock Price Target: $329
Now Live: Discover how much upside your favorite stocks could have using TIKR’s new Valuation Model (It’s free)>>>
What Happened?
Nvidia (NVDA) has done more than sell chips to fuel the AI buildout and has also used its strong credit rating to help customers pay for them.
Now that credit markets are tightening, that strategy is facing its first big test.
Nvidia stock ended Friday with a third straight weekly decline. It is down 7.6% in October, on pace for its worst month since November of last year.
The pressure is coming from Nvidia’s smaller partners, often called neoclouds. CoreWeave, Nebius and IREN are all down at least 30% this month.
The cost of insuring CoreWeave’s debt against default has jumped above 11%.
Nvidia’s exposure is large. As of its July filing, it had $36 billion in backstop agreements for neoclouds, and also guarantees up to $105 billion for a planned OpenAI data center in Ohio.
Nvidia only pays out if the project participants default, but the numbers are big. One research firm puts the present value of Nvidia’s off-balance-sheet liabilities at over $153 billion, up more than $100 billion from last year.
CEO Jensen Huang isn’t worried. He says demand for neoclouds is “off the charts” and that the real problem is a shortage of capital.
Nvidia’s latest quarterly revenue was $96 billion, and it expects about 70% growth next fiscal year.
It also generated $70 billion in free cash flow in the first half of the year, which gives it room to absorb shocks.
See analysts’ growth forecasts and price targets for Nvidia stock (It’s free) >>>
What the Market Is Telling Us About Nvidia Stock
Investors are asking one question: will the AI customers that Nvidia is backing keep paying? One portfolio manager is worried that neocloud contracts look fine in earnings reports but may not hold up over time.
There are also signs the risk may be manageable. Moody’s doesn’t count guarantees as debt, though it says it is watching them closely.
It also expects the chips to keep their value above the amounts Nvidia has guaranteed. Nvidia is also looking for insurers to share some of the risk.
Nvidia stock is being priced on two things at once: strong demand today and financing risk tomorrow.
The open question is how much risk it takes on to keep customers buying. Anyone following Nvidia stock should watch how neocloud credit conditions develop in the weeks ahead.
Estimate a company’s fair value instantly (Free with TIKR) >>>
So what is Nvidia stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what NVDA stock could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
