Nvidia (NVDA) heads into its fiscal second-quarter earnings report on Aug. 26 facing an unusual challenge: the stock has posted its longest losing streak since 2022, even as Wall Street remains overwhelmingly bullish on the chipmaker’s fundamentals.<\/p>\n
Shares closed Friday at $214.75, marking a sixth consecutive session of declines. The pullback has been modest in percentage terms, with Nvidia down roughly 4.7% from its Aug. 13 close of $225.30. But the persistent selling pressure underscores a deeper question hanging over the company: what will it take to unlock the next leg of valuation expansion?<\/p>\n
HSBC analyst Frank Lee offered an answer in a note published Friday. With earnings beats and product roadmaps no longer sufficient to drive a re-rating, Lee argued that Nvidia’s next major catalyst will come from positioning itself as “the world’s largest contributor to open-source AI.”<\/p>\n
“The next major re-rating for Nvidia will be driven by a new narrative as earnings and the product roadmap have become less meaningful narratives for re-rating,” Lee wrote.<\/p>\n
The analyst pointed to data showing that open-source models now represent the second most popular category by token generation, according to Nvidia’s own figures. That shift matters because open-source small language models, or SLMs, are increasingly becoming the preferred engine for agentic AI and on-device applications.<\/p>\n
“A boost in small language models presents significant earnings upside by lowering the barrier to entry for enterprise inference, expanding the total addressable market for Nvidia’s infrastructure beyond just a few frontier labs to millions of individual developers and sovereign nations,” Lee added.<\/p>\n
The open-source thesis arrives at a moment when Nvidia is aggressively expanding its role beyond chip design and into the financing and physical infrastructure that underpins AI deployment. Earlier this month, the company announced partnerships with Apollo Global Management (APO), BlackRock (BLK), Blackstone (BX), Brookfield (BN), Goldman Sachs (GS), and KKR (KKR) to establish independent compute financing platforms. The consortium aims to mobilize more than $500 billion in private capital to fund AI data centers and “AI factories,” effectively transforming Nvidia hardware into an investable asset class for institutional investors.<\/p>\n
Jensen Huang followed that announcement with a separate agreement to provide up to $105 billion in credit support and residual value guarantees for SB Energy’s 8-gigawatt PORTS Technology Campus in Pike County, Ohio. The facility will be leased by OpenAI and will run exclusively on Nvidia AI infrastructure.<\/p>\n
Bank of America analyst Vivek Arya framed the strategy in a note this week: “The strategic intent is clear: NVDA is committed to the transformational nature of AI and to securing every input \u2014 chip supply, land, power, shell \u2014 especially for disruptive, non-investment-grade customers such as frontier labs and neo-clouds.”<\/p>\n
Nvidia also disclosed a minority investment Friday in Cloverleaf Infrastructure, a developer focused on securing land and grid power for large data centers. The move reinforces the company’s deepening involvement in the physical bottlenecks surrounding AI expansion.<\/p>\n
That financing strategy, however, has introduced a new dimension of risk. Critics argue that arrangements in which Nvidia helps fund customers that ultimately purchase Nvidia systems raise concerns about circular financing. The scrutiny intensified after the OpenAI data center guarantee was reported by Reuters.<\/p>\n
Expectations heading into Wednesday’s report are elevated. Nvidia has guided for approximately $91 billion in revenue for the fiscal second quarter, plus or minus 2%, following record first-quarter revenue of $81.6 billion. Analysts tracked by TipRanks maintain a Strong Buy consensus, and Bank of America has kept a $350 price target.<\/p>\n
Market positioning reflects that optimism. Nvidia’s stock has outperformed the S&P 500 by five percentage points over the past month, according to Yahoo Finance AlphaSpace data. The company’s growing investment portfolio also provides a cushion, with valuations of privately held AI companies such as Anthropic continuing to climb.<\/p>\n
Still, the bar for Wednesday’s report extends beyond revenue growth alone. Investors will be watching for evidence that Nvidia can sustain its extraordinary expansion without assuming disproportionate financial risk to keep the AI spending cycle alive. The open-source narrative Lee identified may ultimately determine whether the stock can break out of its current consolidation and command an even richer multiple.<\/p>\n
Key Nvidia Data PointsValueFriday closing price$214.75Consecutive losing sessions6 (longest since 2022)Decline from Aug. 13 close4.7%Fiscal Q2 revenue guidance$91 billion (+\/- 2%)Fiscal Q1 revenue$81.6 billion (record)BofA price target$350AI financing consortium target$500 billionOpenAI data center credit supportUp to $105 billion<\/p>\n
Note: Data compiled from company guidance, analyst notes, and market data as of Friday’s close.<\/p>\n","protected":false},"excerpt":{"rendered":"Nvidia (NVDA) heads into its fiscal second-quarter earnings report on Aug. 26 facing an unusual challenge: the stock…\n","protected":false},"author":2,"featured_media":109021,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[20667],"tags":[24052,23056,12927,38965,45099,45101,45097,12770,9881,11023,23043,5359,1187,45098,45100],"class_list":["post-109020","post","type-post","status-publish","format-standard","has-post-thumbnail","category-hsbc","tag-apollo-global-management","tag-bank-of-america","tag-blackrock","tag-blackstone","tag-brookfield","tag-cloverleaf-infrastructure","tag-frank-lee","tag-goldman-sachs","tag-hsbc","tag-jensen-huang","tag-kkr","tag-nvidia","tag-openai","tag-sb-energy","tag-vivek-arya"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@UnitedKingdom\/117142141200298105","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/109020","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/comments?post=109020"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/109020\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media\/109021"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media?parent=109020"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/categories?post=109020"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/tags?post=109020"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}