TenQ

The NVIDIA story

NVIDIA designs the GPUs and software behind most AI models, and faces the question of whether demand for complete AI infrastructure can support its expanding supply commitments and financial guarantees.

Written from NVIDIA's own filings with the SEC, and rewritten when it publishes a new earnings release. Updated 2026-09-30.

  • $228.86share price, last close
  • $5.52Tmarket value
  • 29/36TenQ Score checks passed
  • 19.3%growth a year the price assumes

The story in brief

  • AI dominates revenue. Data Center revenue reached $89.0 billion in the quarter to July 2026, up 117% from a year earlier, as Blackwell Ultra infrastructure expanded.
  • Commitments reshape exposure. NVIDIA’s $279 billion of supply and capacity commitments and $105 billion guarantee for SB Energy extend its financial exposure beyond chip design.
  • Cash trails profits. NVIDIA generated $127.0 billion of free cash flow over the last twelve months, but its cash conversion check was 0.70 against TenQ’s 0.80 bar.

What drives the business

  • NVIDIA has expanded from GPUs into complete AI infrastructure, combining chips, networking, systems and CUDA software, with over 7.5 million developers using CUDA and its other software tools.
  • Compute & Networking, which includes Data Center and Automotive, generated $88.3 billion in the quarter to July 2026 against $7.9 billion for Graphics, which includes GeForce gaming and professional workstation GPUs.
  • Blackwell Ultra drove Data Center growth in the quarter to July 2026, with hyperscaler revenue of $48.7 billion and enterprise and AI cloud revenue of $40.3 billion showing demand beyond the largest cloud operators.
  • Vera Rubin entered full production with racks running at partners including CoreWeave, Google Cloud, Microsoft Azure, Oracle Cloud Infrastructure and Nebius, extending NVIDIA’s transition toward integrated computing platforms.
  • Under the PORTS-Pike arrangement, NVIDIA is the exclusive AI compute infrastructure provider, while SB Energy will build, own and operate the Ohio campus under a 20-year lease to OpenAI, with an initial deployment designed for 4.25 IT-GW.

What the price assumes

At $228.86, the reverse DCF implies free cash flow after stock pay grows 19.3% a year for ten years, using a 10.2% discount rate.

That compares with 56.3% annual growth over the last 10 years and TenQ’s 30.1% check bar, which slows the historical record halfway toward 4%.

The implied growth clears that check, but the 2.3% free cash flow yield is below its historical 2.5% and TenQ’s 3.0% threshold.

Value NVDA on your own assumptions

What could change the story

  • The $279 billion of supply and capacity commitments, primarily for memory, and the $105 billion PORTS-Pike guarantee expose NVIDIA to unused capacity or unrecovered costs if demand or counterparties fall short.
  • Cash and short-term investments of $56.6 billion exceed total debt of $33.4 billion, but debt service and long-term infrastructure obligations place additional demands on financial flexibility.
  • Revenue growth over the last twelve months was 83.4%, below the 100.0% annual pace over the last three years, while the failed cash conversion check shows that profit growth is not translating fully into cash.
  • Expanding U.S. export controls have caused inventory charges and restricted access to China, making regulation an important limit on revenue rather than demand alone.
  • Evolving AI rules across jurisdictions can constrain model training, deployment and releases while increasing compliance costs.

What to watch next

  • For the third quarter of fiscal 2027, NVIDIA expects revenue of $108.0 billion, plus or minus 2%, without any Data Center compute revenue from China.
  • Its GAAP and non-GAAP gross margin outlook is 74.0%, plus or minus 50 basis points, compared with 75.0% in the quarter to July 2026, making profitability through the Vera Rubin ramp a key measure.
  • The next releases will show whether operating cash flow improves as receivables and inventories grow, and whether supply commitments and infrastructure guarantees expand further.
  • NVIDIA’s September 2026 agreement to acquire Hugging Face carries an approximately $11.9 billion purchase price payable to stockholders, subject to adjustments, making completion terms and the platform’s role in NVIDIA’s software strategy additional points to follow.

Sources

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