Nvidia Has Real Problems, but Accounting Fears Are Overblown

what happened

Nvidia shares slipped 2.2% in late trading on Friday to $162.56 and were down roughly 13% for the week. The S&P 500 fell 0.5%. The stock is under pressure after a scandal that forced co-founder and CEO Jensen Huang to step down.

According to Barron's, Nvidia's quarterly filings list commitments and contingencies of $366 billion, plus another $56 billion and $108.5 billion owed to OpenAI. Together that totals $530.5 billion, against total balance sheet liabilities of $91 billion. Most of it, about $279 billion, consists of future payments to suppliers such as memory chip makers, spread over many years.

The same report notes that Broadcom has $127 billion in similar purchase commitments against $88 billion in liabilities. Both companies' figures are rising partly because memory chips have become expensive. The author puts Nvidia's AI buildout commitments closer to $200 billion, including more than $100 billion for OpenAI. Nvidia did not respond to a request for comment.

why it matters

For markets, the headline half-trillion figure overstates Nvidia's exposure, according to the author, who puts customer financing closer to $200 billion. Questions about circular financing and Nvidia's willingness to extend favorable terms to buyers remain valid.

market impact

Nvidia shares: accounting questions weigh on the stock, but the scale of risk may be smaller than stated

• ↔Nvidia shares mixed — accounting concerns are offset by the view that the real exposure is smaller than headline figures

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