Nvidia boosted its forecast for artificial intelligence (AI) chip sales next year as the $5 trillion (€4.3 trillion) tech giant tried to rebut criticisms that its raft of investments and financing deals with customers amount to risky circular financing.The world’s most valuable company on Wednesday reported revenue of $96.2 billion for the quarter to the end of July and projected sales of about $108 billion for the current quarter, beating Wall Street expectations.Chief financial officer Colette Kress said Nvidia expects strong growth to continue, forecasting a 70 per cent rise in sales next year. She said customer demand was set to double but revenue would be limited by supply constraints.The projection, along with the announcement that Amazon Web Services has agreed to start deploying an additional 2mn of Nvidia’s latest GPUs this quarter, pushed the shares up more than 7 per cent in premarket trading.The robust earnings report comes as the chip group faces greater investor scrutiny over how it has deployed its vast balance sheet to help its customers fund their building of AI infrastructure.This month, Nvidia agreed to provide partial guarantees to a consortium of Wall Street investors that will provide $500 billion in chip financing for its clients, and signed up to a more than $100 billion backstop for an OpenAI data centre in Ohio.[ Intel, Nvidia and the wild swings beneath a calm marketOpens in new window ]These come on top of investments in many of its biggest customers and revenue-sharing and backstop deals tied to its chips.“We recognise the scale of this support and we know some will call this circular financing. We see it differently,” Kress told analysts on Wednesday.But she insisted these investments “will be excellent” with “limited” risks because of strong demand for computing power.Ahead of Wednesday’s earnings, Morgan Stanley analysts called for a “high degree of transparency” around these deals, which critics say involve Nvidia propping up demand for its products and leave it exposed if usage of AI disappoints exuberant expectations, causing an oversupply of its hardware.The chips group is a major investor in OpenAI and Anthropic, and Kress said demand from AI labs that Nvidia is leveraging its “balance sheet” to support would contribute roughly a quarter of its business next year.Will the upcoming budget drive inflation and increase costs for Irish households? Listen | 29:13Nvidia’s financial performance has become a bellwether for the health of the AI infrastructure boom because its advanced semiconductors are widely used to train and run models.Melissa Otto, head of research at Visible Alpha, said the guidance of 70 per cent growth next year was a “very significant beat of expectations”, which were around 45 per cent.Data centre revenue, which relates to the core AI chip business that has powered much of Nvidia’s growth, was $89 billion last quarter, up 117 per cent year on year.Chief executive Jensen Huang emphasised the increasing number of companies beyond OpenAI that were contributing to demand for AI infrastructure. “This time last year, one lab alone was driving the buildout; today, we have a golden age of new AI labs and start-ups.”[ Why is Nvidia, the world’s most valuable company, cheaper than chocolate maker Hershey?Opens in new window ]A handful of Big Tech cloud providers, such as Amazon and Google, account for about half of Nvidia’s revenue, with the more than $1 trillion investment bonanza by these “hyperscalers” powering much of its recent success.Huang defended the use of Nvidia’s balance sheet to help its customers afford more hardware. He said this generation of AI and data centre players “will be some of the most consequential technology companies in history”.The chip group also flagged declining margins, as intense demand from data centres causes an industry-wide shortage of memory chips. Gross margin was 75 per cent in the quarter, but Nvidia said it would fall to as low as 71 per cent by early next year before improving.The company on Wednesday said its commitments with suppliers had increased to $279bn from $119bn in the previous quarter, “primarily related to the procurement of memory”.Nvidia’s free cash flow dipped to $21.3 billion last quarter, down from $48.6 billion in the previous three months, as it waited longer for payments from some customers.It said “extended payment terms on large, multi-quarter agreements with certain investment-grade customers” had led to an increase in outstanding sales and accounts receivable, which rose to $63.1 billion from $40.7 billion three months earlier.Net income rose to $59.7 billion, boosted by paper gains on its stock investments, including a stake in SpaceX, which went public in June. Nvidia reported net gains from equity securities of $7.8 billion for the quarter.Nvidia remains largely frozen out of China’s market by strict US export controls and a backlash from Beijing against its products. It said during the quarter less than 1 per cent of its revenue from its older-generation Hopper chips – cleared for sale there under US export rules – came from shipments to China. – Copyright The Financial Times Limited 2026