Nvidia stock NVDA gained 1% on Thursday as Barclays analyst Tom O’Malley estimated that the chipmaker could generate $401 billion in hyperscaler revenue in 2027, above the firm’s current forecast of $370 billion.
O’Malley used what he described as “napkin math” based on Nvidia’s latest data on information technology spending by major cloud providers.
The calculation suggests Nvidia’s revenue opportunity from hyperscalers could be larger than Wall Street currently expects.
However, Nvidia’s financing strategy is also facing scrutiny from some lenders and investors, who have questioned the long-term value of its AI chips as collateral for debt.
Barclays sees higher Nvidia revenue potential
According to O’Malley’s calculations, Nvidia could generate $237 billion in hyperscaler revenue in 2026 and $401 billion in 2027.
Those figures compare with Barclays’ existing estimates of $206 billion and $370 billion, respectively.
In an upside scenario, the firm sees hyperscaler revenue reaching $246 billion in 2026 and $417 billion in 2027.
The calculations are based on a chart Nvidia shared showing its share of IT capital spending among the five largest cloud service providers over recent years, along with its estimate for 2027.
O’Malley estimates Nvidia’s share of IT capital spending could reach 44% in 2027.
The calculation may also understate the potential opportunity because Nvidia’s reported hyperscaler revenue includes SpaceX, while the 44% spending-share figure covers only the five largest cloud providers.
Barclays currently has an ‘Overweight’ rating on Nvidia with a $275 price target.
Cantor Fitzgerald analyst C J Muse also maintained a Buy rating, with a $350 price target.
Nvidia’s chip financing plan faces scrutiny
Alongside the revenue outlook, Nvidia’s financing strategy has raised questions among some lenders and asset managers.
The company has outlined a $500 billion financing plan that uses Nvidia’s advanced AI chips as collateral.
The strategy is intended to help AI developers access computing capacity as companies invest heavily in data centres, chips and power infrastructure.
A Reuters report said citing Bankers and credit managers that some lenders want stronger guarantees as they assess how long Nvidia’s chips can continue generating revenue.
The concern centres on whether the specialised chips can retain sufficient value over an extended period to serve as long-term collateral.
“Wall Street is much more conservative,” Tony Trzcinka, a senior portfolio manager at Impax Asset Management, said in the report regarding Nvidia’s claim that its most specialised chips can generate revenue for a decade.
Nvidia defended the approach, saying its AI computing assets can support long-term financing.
“Our AI compute is a productive, durable and fungible asset that can support long-term financing,” an Nvidia spokesperson said in the report.
The company added that financing partners independently assess factors including customer commitments, expected cash flow and residual value.
Wall Street weighs guarantees and residual value
Nvidia announced its financing initiative in August with financiers including Blackstone, Apollo and KKR.
The plan envisioned using chips as collateral with limited guarantees to help AI developers access Nvidia’s computing capacity.
Nvidia has said some transactions could include no more than a 25% residual value guarantee.
The structure is intended to address concerns surrounding circular financing, according to the company.
However, Reuters reported that some banking sources believe Nvidia may need to provide guarantees across its deals, or have the financing backed by revenue streams from investment-grade customers such as technology companies.
The scrutiny comes as hundreds of billions of dollars are being invested in AI infrastructure, increasing attention on the financing structures supporting that spending.
Morningstar analysts have also raised questions about the use of private credit, vendor financing and circular transactions in AI infrastructure financing, noting that similar structures played a role during the dot-com boom and bust.
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