Nvidia's Reign Tumbles Suddenly, This Week Will Be Decisive
Global chip-making giant Nvidia is expected to face a severe test when it releases its latest financial report on Wednesday (26/8) local time. Investors are awaiting concrete evidence of whether its newest generation of chips, Rubin, can drive the next wave of exponential growth amid rising doubts over the sustainability of the Artificial Intelligence (AI) investment boom.
As the largest beneficiary of the AI infrastructure explosion, Nvidia’s share price movement has recently come under pressure. The market is scrutinising the company’s aggressive move to pour billions of dollars back into the AI ecosystem. This scheme has sparked concerns over circular deals that risk artificially manipulating demand.
Throughout this year, Nvidia’s share price has recorded an 11.8% increase, yet it still lags behind several of its main competitors. In fact, the crown of the world’s most valuable company, which it once held, had to be handed back to Apple last month.
Based on analyst consensus compiled by LSEG, Nvidia’s second-quarter revenue is projected to surge nearly twofold year-on-year (YoY) to US$92.18 billion (Rp1,633 trillion). This would be the fastest growth rate in the last seven quarters, driven by data centre segment sales soaring more than twofold.
However, market attention is now shifting to how quickly Nvidia can transition customers from the Blackwell architecture to the newest Vera Rubin chips, whose initial shipments are scheduled to begin at the end of 2026.
This market acceleration is supported by data centre spending that has increased significantly by Big Tech companies, estimated to exceed US$730 billion this year, as well as substantial budget increases from mid-scale AI cloud service providers such as CoreWeave, which is directly backed by Nvidia.
Investor scrutiny has sharpened after Nvidia facilitated massive financing worth US$500 billion from six US banking consortia for its customers. Not only that, Nvidia also provided credit guarantees of up to US$105 billion for OpenAI to lease a 20-year data centre facility in Ohio.
“This move makes Nvidia act like a central bank in the AI ecosystem,” said Brian Mulberry, Chief Market Strategist at Zacks Investment Management. “The biggest risk is total exposure to AI without any diversification. The key lies in the adoption rate of AI tools, which must continue to grow.”
Nvidia CEO Jensen Huang denied accusations of circular financing schemes. According to him, Nvidia is leveraging its abundant cash position to support the long-term infrastructure needs of its rapidly growing customers.
The launch of the Rubin chip is crucial amid intensifying competition. Nvidia now not only competes with custom chips made by Big Tech but also faces the penetration of Intel and AMD processors in AI inference processing.
Morgan Stanley analysts predict the Rubin chip could contribute revenue of up to US$9 billion in the third quarter. However, the market is still monitoring how effectively Rubin can maintain Nvidia’s market share dominance against the onslaught of Big Tech’s in-house chips.
For the third quarter, analysts expect Nvidia’s revenue to rise 82.8% to US$104.20 billion, with adjusted gross margin remaining stable at a high level of 75%.