Nvidia's Revenue Wouldn't Be 'Impacted...At All' If It Didn't Invest In CoreWeave: Analyst Explains Reason Behind Neo Cloud Investments

Nvidia Corp. NVDA has consistently achieved record revenue over the years, and analysts project continued growth. However, its investments in neo cloud companies may impact revenue, according to an analyst.

What Happened: This analyst, who was a former public equity investor in Nvidia on the buy side, explains why it was important for Jensen Huang to diversify his investments.

Nvidia has recently invested in CoreWeave Inc. CRWV, ahead of its IPO, and it invested in Nebius Group NV. NBIS in December 2024.

According to Gavin Baker, the managing partner and CIO at Atreides Management, “If Nvidia had not put any money into CoreWeave, and not put any money into other neo clouds, I don’t think it would have impacted their revenues at all.”

While speaking at the All-In Podcast, Baker said that Nvidia could have potentially sold more to Meta Platforms Inc. META, Amazon.com Inc. AMZN, and Microsoft Corp. MSFT and generated higher revenue, instead of investing in neo cloud companies.

He explained that even three years ago, the three major players in the cloud computing space dominated that market.

“If you’re Nvidia, that’s not great, to have just three big customers. Those big clouds, particularly in 2023, when there was such a rush to get GPUs, they each wanted their own custom version of an Nvidia server,” he said.

“Nvidia, by giving a standard reference design to companies like CoreWeave, got GPUs in the market a lot faster… …So the incremental share of revenue for the big three cloud computing hyperscalers went down, and that was nothing but good for Nvidia because they now have a more fragmented base of buyers, who have less power over them.”

Why It Matters: According to Yahoo Finance, Nvidia is estimated to achieve sales of $204.4 billion in fiscal 2026, which would be a 56.60% gain from fiscal 2025 revenue of $130.5 billion.

While this is nearly half of the 114% year-on-year increase in fiscal 2025, analysts still believe that Nvidia’s Blackwell chip sales will lead to robust financials.

Metric	FY 2025	FY 2026 Estimate
Revenue	$130.5 billion	$204.4 billion
Revenue growth (YOY)	114%	56.60%
EPS	$2.99	$4.53
Adjusted EPS growth (YOY)	130%	51.50%

For the first quarter of fiscal 2026, due to the scaling of Blackwell AI chip production, Nvidia projects a temporary gross margin dip to 70.6%-71%, followed by a recovery to the mid-70s by the end of the year.

Price Action: Shares of Nvidia were trading 1.5% lower in premarket on Wednesday, while the Invesco QQQ Trust ETF QQQ, tracking the Nasdaq 100 index, was down by 0.75%.

The stock has fallen by 20.36% on a year-to-date basis, whereas it was up 23.14% over the last year.

Benzinga Edge Stock Rankings indicate Nvidia has negative price trends over the short, long, and medium term. Its momentum ranking was strong at the 75.97th percentile, but its value ranking was weaker. Further fundamental details and the quality and growth rankings are available here.

Benzinga’s analysis of 40 analysts shows a consensus “buy” rating for the stock, with an average price target of $176.26, ranging from $120 to $220. Recent ratings from DA Davidson, Benchmark, and Susquehanna average $165, suggesting a 52.14% potential upside.