Nvidia reported impressive second-quarter fiscal 2027 results, surpassing sales forecasts and boosting its stock price. However, the company also revealed a concerning 63% increase in net accounts receivable, which rose from $38.5 billion to $63.1 billion between January and July.
This indicates a growing backlog of orders that have been filled but not yet paid for, with projections from Bank of America suggesting accounts receivable could reach $147 billion by 2029, a 107% increase. Morgan Stanley's estimates are even higher, predicting $171 billion by January 2029.
Additionally, a significant concentration of risk is evident, as just five customers account for 70% of these receivables, primarily from cloud computing giants. Nvidia's financial commitments also surged, more than doubling to $279 billion in the second quarter, raising concerns about circular financing.
Analysts from Goldman Sachs highlighted these commitments as substantial, noting they include $366 billion across various agreements. Furthermore, Nvidia's free cash flow dropped sharply to $21 billion from $49 billion in the previous quarter, falling well below expectations due to extended payment terms offered to customers.
This situation has led some analysts to caution about the implications of lengthening accounts receivable days, although others view it as a temporary issue linked to aggressive growth strategies