Nvidia's Pre-Earnings Rally Faces a Fork in the Road: Record Demand Meets Circular-Financing Fears
Published on 08/05/2026 at 10:31 | Redaktion boerse-global.de
The numbers tell a story of momentum. Over the past seven trading sessions, Nvidia shares have climbed 12.96 percent, reaching €187.62 in German trading. On Tuesday alone, the stock added 2.28 percent to close at €183.66, with rivals AMD and Intel riding the same wave as the S&P 500 touched fresh highs. Yet beneath this surface-level strength lies a more complicated picture — one where unprecedented demand signals collide with growing skepticism about how the AI boom is being financed.
The August 26 Reckoning
All eyes now turn to Wednesday, August 26, when Nvidia reports fiscal second-quarter results for the period ending July 26. The company has already guided to revenue of $91 billion, plus or minus 2 percent — a figure that would represent 96 percent year-over-year growth. That's an aggressive bar, but one Nvidia has historically cleared with regularity. The first quarter of fiscal 2027 set the tone: revenue hit $81.6 billion, up 85 percent, with the data center segment alone contributing $75.2 billion, a 92 percent jump on a 75 percent adjusted gross margin.
The market's recent enthusiasm suggests investors are betting on another beat. The technical setup supports that view: the relative strength index sits at a moderate 59.1, leaving room for further upside without flashing overbought signals, while the stock trades comfortably above its key moving averages. Still, the shares remain 7.35 percent below their 52-week high of €202.50, and the average analyst price target of €262.72 implies roughly 40 percent upside from current levels.
Demand That Outstrips Supply
The bull case has found fresh ammunition in recent days. Analyst Dan Ives of Yorkville & Ives describes a demand-to-supply ratio of 12 to 1 for Nvidia's chips, framing the recent pullback as a buying opportunity. Supporting that thesis is a multi-year agreement between Corvex and a leading AI company for liquid-cooled Blackwell GPU systems — the HGX B200 with Quantum-2 InfiniBand networking — financed through debt, customer prepayments, and cash, without issuing new equity.
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Perhaps more striking is the endorsement from Elon Musk. On SpaceX's earnings call, he praised Nvidia's Vera Rubin platform and said the company would rely exclusively on Nvidia technology going forward. SpaceX is targeting more than two gigawatts of compute capacity by the end of 2026, with plans to multiply that figure further by the end of 2027.
Nvidia CEO Jensen Huang has also moved to quell concerns about the transition from Blackwell to the next-generation Vera Rubin architecture, confirming that production is already underway and describing the volumes as "massive." That addresses one of the key worries that has dogged the stock: that the shift could create supply bottlenecks or cannibalize existing demand.
The Skeptics Circle
Not everyone is convinced. The bears point to what they call circular financing — a web of interlocking deals that could be inflating demand artificially. Nvidia is reportedly backstopping roughly $250 billion in debt for an OpenAI data center in Ohio, while separate arrangements between the SK Group and OpenAI, potentially worth up to $750 billion, circulate in the market. Critics argue that chipmakers, cloud providers, and AI startups are effectively funding each other, creating the appearance of robust demand without proven end-customer profitability.
Michael Burry has expanded his put positions against Nvidia. Aswath Damodaran, the NYU professor known as the "Dean of Valuation," exited his stake entirely in late 2025, warning of a "Big Market Delusion." His math: AI companies would need industry-wide revenues of $2 trillion to $4 trillion to justify current valuations, making the stock "priced for perfection" with no margin of safety. Ray Dalio has drawn comparisons to 1929 and 2000, citing rising equity issuance and interest rates in the AI sector.
China Remains the Wild Card
No assessment of Nvidia's prospects is complete without addressing export controls. The China situation remains unresolved and could resurface as a headwind in the upcoming earnings call. The H200 chip's history illustrates the volatility: exports were banned, then permitted again by Donald Trump in December 2025, before the Commerce Department wrapped the approval in rules with contradictory conditions. Chinese buyers have shown little enthusiasm for the compromise chips, leaving China revenue as an uncertainty rather than a growth driver.
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A Divided Verdict
The analyst community leans heavily bullish — 36 of 37 covering analysts rate the stock a buy, with price targets ranging from $250 to $500. Tigress Financial's $425 and Evercore's $413 sit at the optimistic end, while consensus estimates cluster between roughly $297 and $309. The forward price-to-earnings ratio, depending on the calculation, ranges from 18.9 to 22.8 — below both the S&P 500 and the PHLX semiconductor index, a gap bulls cite as evidence of room to run.
For investors, the setup is genuinely two-sided. On one hand: robust fundamentals, a supply crunch, and blue-chip endorsements from the likes of SpaceX. On the other: mounting warnings about overheated financing structures across the AI ecosystem, with Nvidia at its center. The conference call on August 26 will determine which narrative carries the day — not the price action of the past week.
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