Nvidia Forecasts 70% Growth Amid Massive Supply Commitments

Nvidia reported quarterly sales and profits that exceeded analyst forecasts on Wednesday, projecting 70% revenue growth for the fiscal year ending January 2028. To sustain this trajectory and address supply constraints, the company increased its purchase commitments to suppliers to $279 billion in the latest quarter, a significant rise from the previous $119 billion.

Chief Financial Officer Colette Kress stated that these commitments primarily target high-bandwidth memory essential for AI chips. While these investments secure necessary components, the company expects gross margins to decline from 74% to 71.5% due to rising memory costs.

Beyond hardware procurement, the company is assuming substantial financial risks to support its AI customers. These include a $105 billion backstop for an OpenAI data center lease, $125 billion in residual-value support for a Wall Street financing deal, and $36 billion in sales guarantees for cloud-computing firms. Kress noted that some frontier labs are growing faster than their balance sheets and credit profiles can support, necessitating these credit enhancements.