S&P Global Ratings upgraded NVIDIA Corporation's (NASDAQ:NVDA) long-term issuer credit rating from "AA-" to "AA", citing the insatiable market demand for AI systems. The upgrade reflects the chipmaker's sustainable competitive edge and its massive cash flow generation within the rapidly expanding data center ecosystem.
The rating agency is now projecting that the revenue of $NVDA will grow 82% in fiscal year 2027, hitting $394 billion, followed by a 38% jump to $544 billion the next year. This explosive growth is driven by the company's successful transition to the Blackwell GPU platform and a clear roadmap for its next-gen architecture, Rubin.
NVIDIA's platform-centric approach has allowed the company to command a significant price premium while deepening its competitive edge over rivals like Advanced Micro Devices Inc. The rise in operating margins and low capital intensity are expected to boost free operating cash flow to $196 billion in fiscal year 2027 and $276 billion in fiscal year 2028. $ESPORTS
This immense liquidity has allowed the Silicon Valley giant to aggressively finance shareholder returns, including an expanded $80 billion share repurchase authorization and an increase in distributed dividends. At the same time, NVIDIA secured its supply chain through large upfront payments to Taiwan Semiconductor Manufacturing Co. for cutting-edge foundry capacity.
Despite the upgrade, S&P Global highlighted relevant risks stemming from the high geographical and supplier concentration of NVIDIA with TSMC in Taiwan. Furthermore, the broader advancement of AI infrastructure remains vulnerable to a potential tightening in capital markets and possible bottlenecks in power supply for data centers.
The stable outlook indicates the expectation that NVIDIA will maintain its market leadership and continue to strengthen its solid balance sheet. S&P Global noted that a future rating upgrade would require a significant reduction in manufacturing outsourcing concentration, coupled with maintaining net cash positions.
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