Nvidia Stock Forecast as Circular Finance Concerns Emerge

Nvidia shares traded near $208 as investors assessed reports that the company was discussing a financing guarantee for OpenAI’s planned Ohio data-centre project. The proposal also renewed debate among some market observers about whether Nvidia’s expanding investments in AI customers could create perceptions of circular financing.

Nvidia Stock Wavers Amid Circular Financing Concerns

According to reports, Nvidia is in discussions to provide a financing guarantee of up to $250 billion to support OpenAI’s long-term lease of a planned 10-gigawatt AI data-centre campus being developed by SB Energy in southern Ohio. Negotiations remain ongoing and no final agreement has been announced.

Some analysts describe this type of arrangement as circular financing because a supplier supports customers that later purchase its products. Critics argue the approach may reinforce future revenue, while supporters view it as a common way to accelerate large infrastructure projects. The reported OpenAI proposal has not been described by Nvidia as circular financing.

Nvidia previously agreed to participate in OpenAI’s latest funding round, reportedly committing about $30 billion at a valuation exceeding $700 billion.

It recently invested in IREN, a Bitcoin mining company that is transitioning to the AI data center. It invested $2 billion in the company, a substantial amount for a company valued at over $13 billion.

Nvidia also invested $2 billion in Nebius and is now one of its biggest shareholders. It also owns about 11% in CoreWeave, the biggest company in the neocloud business. It has also committed to invest up to $10 billion in Anthropic, the parent company of Claude. Most recently, it also invested $1 billion in Naver, a South Korean company.

To be fair, other companies have done the same. For example, Advanced Micro Devices (AMD) entered a large deal with OpenAI. As part of the deal, OpenAI may decide to take a 10% in the company. AMD also recently announced a $5 billion investment in Anthropic.

Top Earnings Ahead

Nvidia stock is also reacting to a recent deal with SK Hynix, the giant South Korean company. In a statement, the two companies said that they will have a $500 billion partnership spanning AI factories and next-generation memory.

Looking ahead, NVDA stock will next react to the upcoming big-tech earnings, which will provide hints about their capital spending plans. Meta Platforms and Microsoft will be the first ones to release their numbers on Wednesday.

Amazon will then release its earnings on Thursday. While Apple will publish its earnings on Thursday, it is not a big buyer of Nvidia chips.

The big-tech earnings will provide more information about their capital spending. In the last quarter, these firms signaled that they will spend $725 billion in capex this year.

An increase in their commitments will be bullish for Nvidia because it is the biggest supplier of their chips. However, there is a risk that one or more of these companies will scale down their spending because investors are now more concerned about capital expenditures.

Nvidia Stock Price Technical Analysis

The daily chart shows that the NVDA stock has moved sideways in the past few days. As a result, it is consolidating along the 50-day and 25-day Exponential Moving Averages (EMA).

A closer look shows that it is slowly forming a rising wedge pattern whose two lines are nearing their confluence zones. A rising wedge is one of the most common bearish signs in technical analysis.

The Relative Strength Index (RSI) has formed a symmetrical triangle pattern whose two lines are about to converge. Therefore, the stock will likely retreat in the coming days, potentially to the key support level of $190.

This article is for informational purposes only and does not constitute financial or investment advice. Stock prices, technical indicators and corporate financing developments do not guarantee future market performance. Investors should conduct independent research or consult a licensed financial adviser before making investment decisions.