Nvidia heads into its next earnings report with Wall Street nearly unanimous in its optimism — 36 of 37 analysts rate the stock a Buy. The average price target sits around $309, roughly 49% above where shares trade today. But beneath that consensus lie several risks that could rattle the stock.
Wall Street's Bullish Consensus
Analysts expect Nvidia to nearly double its earnings from a year ago. Bernstein and Wells Fargo both reiterated $315 price targets just days before the report. The options market is pricing a roughly 6% swing around the earnings print, a sign that traders expect a big move but aren't sure which direction.
The Circular Spending Debate
Investor Michael Burry has warned about what he calls circular spending: Nvidia reportedly backstopped about $250 billion of debt tied to OpenAI's data centers. That effectively means Nvidia is funding customers who then buy its chips. Bernstein analyst Stacy Rasgon, despite his buy rating, has flagged the same concern. If that debt structure unravels, demand for Nvidia's chips could take a hit.
China Exposure and Custom Chip Threats
China represents up to $5 billion in Nvidia sales that could be wiped out by a policy shift. The Biden administration has already tightened export controls, and further restrictions remain a possibility. Meanwhile, DeepSeek founder Liang Wenfeng argued that new tools could lower barriers to Nvidia's CUDA software ecosystem. He pointed to Huawei's Atlas 950 system as a potential alternative. Huawei trails Nvidia by roughly two years in AI chip technology, but the gap is narrowing.
Beyond Huawei, Nvidia's biggest customers — Google, Amazon, and Meta — are all building custom chips. That slow squeeze on Nvidia's dominance may not show up in next quarter's numbers, but it's a long-term risk investors are watching.
Insider Selling and Institutional Flows
Insiders sold roughly $410 million in Nvidia stock over the past three months. That's a notable amount, though not necessarily a bearish signal on its own. On the other side, Chaikin Money Flow shows institutional cash still flowing into Nvidia, suggesting no immediate shift in sentiment among big money managers.
Nvidia's stock has gained nearly 11% year-to-date, but the risks are piling up. The earnings report will give investors a clearer picture of whether the bull case holds — or whether the headwinds are starting to bite.
