Nvidia (NVDA) may be playing a bigger role in Oracle's (ORCL) artificial intelligence expansion than simply supplying chips. In fact, according to a TD Cowen analyst, the semiconductor giant may also be providing financial support that helps Oracle secure its data center and AI buildout. According to an Oct. 20 report on Seeking Alpha, TD Cowen analyst Michael Elias said Nvidia may be supporting Oracle through financial backstops or by leasing capacity itself and then subleasing it to Oracle. He linked that possible support to Oracle’s recent leasing activity in Southeast Asia and its reported agreement with Tencent (TCEHY).
www.barchart.com Depending on a potential agreement, such a deal could give a landlord or financing partner (in this case, reportedly Nvidia) additional assurance that certain obligations will be covered if the primary customer (Oracle, for example) cannot meet them. With subleasing, Nvidia would lease capacity directly and make it available to Oracle under a separate agreement. We should note that neither Nvidia nor Oracle had responded to Seeking Alpha’s requests for comment when that report appeared.
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Why Nvidia Would Want to Help
Whatever the case is, it would help ensure that Oracle’s orders for Nvidia CPUs don’t come to a screeching, devastating halt. We also have to consider that, as noted by CNBC, Oracle has about $125 billion in debt as it funds its data center and AI buildout. It also has $5.4 billion in negative free cash flow in its most recent quarter, as compared to the negative $362 million posted a year earlier.
For Nvidia, helping a customer overcome a financial obstacle could support demand for its computing technology. For Oracle, additional capacity could help it deliver services customers have already agreed to purchase.
Investors are paying closer attention to the borrowing behind the AI expansion. Dealroom.com, summarizing Financial Times reporting that cited Morgan Stanley, said weekly trading in credit protection linked to seven major AI-related companies averaged more than $9 billion in September, compared with less than $2 billion in July. It's also been estimated that AI-linked businesses had raised $466 billion in debt during 2026 to that point, versus $101 billion over the comparable period in 2025. The increased activity suggests greater interest in managing financial exposure, although it does not establish that those companies are headed for default.
That being said, if Nvidia supports Oracle and infrastructure that helps customers buy more of its technology, it can benefit from successful projects. But if those projects struggle, Nvidia could face weaker product demand alongside obligations arising from its financial support. In short, Nvidia is creating a very delicate circular economy.
What Do Analysts Say About NVDA Stock?
Overall, Nvidia has a consensus “Strong Buy” rating on Wall Street. Of the 52 analysts covering Nvidia stock, 48 have a “Strong Buy” rating, three have a “Moderate Buy” rating, and one has a “Strong Sell” rating. The mean target price of $328.75 implies a potential upside of 56% from current levels. Meanwhile, its high-end price target of $515 implies potential upside of 144% from its current price of about $210.96.
Supporting the investment case for Nvidia, the company announced a $150 billion increase to its share repurchase authorization in September, bringing the remaining total to $235 billion at the time. Ahead of its November earnings report, Nvidia forecast fiscal third-quarter 2027 revenue of $108 billion. The midpoint would represent about 89% growth from a year earlier. Data center demand remains a central part of the growth story: revenue from that business climbed 117% in the second quarter. Investors will also be watching for management’s outlook on AI infrastructure spending and how that demand could translate into future revenue.
www.barchart.com On the date of publication, Ian Cooper did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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