Nvidia's Cash Flow Concerns Amid Record Revenue Guidance

Nvidia Corporation's (NVDA) recent Q2 FY27 earnings report raised some eyebrows, despite the company's impressive 70% revenue guidance for FY28. One key red flag is a 52% sequential drop in operating cash flow.

The biggest contributor to this decline was an increase in accounts receivable, which consumed $22.346 billion of cash in Q2, compared to just $2.243 billion in Q1. This led to a significant jump in days sales outstanding from 45 days last quarter to 60 days in Q2.

Investor Ahmad Darmansyah wondered why Nvidia would suddenly allow investment-grade customers to pay up to one year after delivery, leading to such a large increase in accounts receivable.

Despite this concern, Darmansyah emphasized that he is not bearish on the stock and believes it could break above $230 for its next leg of growth. He also noted that Nvidia's fundamentals are still intact, as long as its AI frontier labs and Neoclouds can pay their bills.