NVIDIA Keeps Luring Investors with Strong Customer Ties
NVIDIA (NASDAQ:NVDA) is a stock that one writer continues to buy into due to its strong financials and customer relationships. The Hyperscaler Guarantee refers to the large technology companies, such as Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), and Alphabet (NASDAQ:GOOGL), that spend millions on NVIDIA's products every quarter.
These customers have guided high capex investments for years, with Amazon aiming for $220B in 2026 and Alphabet increasing its full-year guidance to $195 billion to $205 billion. This has resulted in strong revenue growth for NVIDIA, including a recent Q1 FY27 report of $81.61 billion, up 85.23% year over year.
The writer argues that owning NVIDIA is more attractive than owning the customers themselves due to its high gross margin of 75%. Additionally, NVIDIA's debt-to-equity ratio is low at 0.073 and interest coverage is strong at 503x.
However, there is one risk mentioned: China, where NVIDIA shipped zero H20 units in Q1 against $4.6 billion in the year-ago quarter. Despite this, management guided Q2 revenue to $91.0 billion with China stripped out.