Wall Street is looking past Nvidia's expected revenue jump to a potential $200 billion in off-balance-sheet credit exposure tied to its AI financing deals. Morgan Stanley opened credit coverage on the chipmaker this week, and analysts want more detail on Nvidia's multi-year commitments when it reports Wednesday.
Analysts focus on the balance sheet, not the beat
BofA analyst Vivek Arya says the balance sheet matters more than the earnings beat itself, with investors watching for Nvidia's potential disclosure of its multi-year commitments to lock down supply, power, models and demand. Nvidia's hardware has become the infrastructure layer customers borrow to buy, and its balance sheet now works as an implicit guarantee behind billions in AI datacenter financing.
Morgan Stanley initiated its first-ever credit coverage of Nvidia on Tuesday with a Neutral rating, warning that the company's balance-sheet-as-a-service approach introduces risks that conventional leverage ratios — currently a benign 0.4x — fail to surface. Analyst Lindsay Tyler projected total AI-related credit exposure could approach $200 billion by end-2028, adding the tail "remains too early-stage, opaque, and sizable to step in."
Financing deals draw scrutiny
This month, Nvidia helped arrange a $500 billion financing platform from six major U.S. financial institutions — Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR — for customers building AI infrastructure. Separately, the company agreed to guarantee up to $105 billion to help OpenAI lease a datacenter in Ohio for 20 years, though the binding terms and loss-sharing rules remain undisclosed.
The scrutiny arrives as AI credit markets show broader stress. AI hyperscaler debt issuance reached $220 billion in 2026 through early August, roughly $207 billion higher than the same period in 2025, according to BNP Paribas data cited by Reuters. Tech credit spreads have widened to 89 basis points over Treasuries, 9 basis points wider than the overall investment-grade market.
Revenue growth and market reaction
Analysts expect Nvidia's Q2 revenue to nearly double year-over-year to $92.18 billion, the fastest pace in seven quarters, driven by more than a twofold increase in datacenter sales. Q3 consensus stands at $104.20 billion, implying an 82.8% year-over-year gain.
Options traders appear relatively calm about the size of any move. The options market is pricing in a 5.4% swing in either direction after the print, implying roughly a $280 billion market-cap move — below the 6.5% implied move heading into May earnings and well below the 7.4% historical average over the past 12 quarters. Nvidia shares rose 2.2% on Tuesday, snapping a seven-session losing streak, as the broader market climbed ahead of the report.
Source: Investing.com
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