Nvidia Corp. (NASDAQ:NVDA) is doubling down on AI with multibillion-dollar bets in startups like OpenAI and established businesses like Intel Corp. (NASDAQ:INTC); yet, analysts are beginning to highlight that part of that revenue could be looping back in disguise.
Last month, Nvidia pledged up to $100 billion in funding for OpenAI. It directed an additional $5 billion into Intel, deepening its dual role as both supplier and investor.
These moves are helping generate huge chip demand. Yet, analysts at Goldman Sachs express caution: Some of this surge may not be as organic as it seems.
Additional Scrutiny Warranted
In a note shared on Monday, analyst James Schneider said Nvidia's equity financing to customers like OpenAI is starting to resemble "circular revenue." Investments flow out as funding, and returns are realized through GPU sales, thereby inflating growth.
In 2026 alone, Nvidia expects to recognize $13 billion in revenue from OpenAI. Most of the gross profits—roughly $10 billion—will be reinvested in the company, much like a food supplier bankrolling the very restaurants that purchase its ingredients.
"When equity investment comes from a supplier, additional scrutiny is warranted," Schneider said, especially when the same dollars are recycled through vendor relationships.
OpenAI's Infrastructure Is Massive
Goldman estimates OpenAI's 2026 infrastructure costs at $35 billion, primarily driven by the hardware required for inference and training workloads.
Funding will likely come from three sources: internal revenue, estimated at $17 billion, Nvidia equity financing, estimated at $10 billion, and external equity or debt, at about $9 billion.
However, the real strain arises when longer-term commitments are factored in, including $60 billion for Nvidia-backed data centers and $19 billion for Stargate infrastructure. All in, OpenAI could need $114 billion in total cash outlay for 2026 alone.
That implies a funding gap of $62 billion, even after tapping $17 billion in balance sheet cash—raising fresh questions about the sustainability of Nvidia's customer demand pipeline.
“The sustainability of OpenAI’s infrastructure spending will increasingly depend on equity & debt financing,” Schneider said.
“We believe it will increasingly need to rely on equity/debt raises — with up to ~$75bn in 2026 alone,” he added.
Why Goldman Still Likes Nvidia
Despite those concerns, Goldman Sachs raised its 12-month price target to $210. That’s up from $200, implying 11.9% upside from Nvidia's current price of $187.62.
The bank reiterated its Buy rating. Circular deals, analysts say, will account for less than 15% of Nvidia's projected 2027 revenue.
Goldman views the investments not just as financial plays, but as strategic moves that lock developers deeper into Nvidia's CUDA software ecosystem, boost demand for its hardware, and shape the evolution of the AI market.
"These deals signal Nvidia's view on the scale of the opportunity," Schneider said.
"They reinforce market leadership."
Who's Really Driving Nvidia's Growth?
Goldman now sees Nvidia's datacenter revenue diversifying beyond Big Tech hyperscalers like Alphabet Inc. (NASDAQ:GOOGL), Meta Platforms Inc. (NASDAQ:META) and Amazon.com Inc. (NASDAQ:AMNZ), with an increasing share from AI startups and sovereign buyers—segments seen as more volatile and dependent on external financing.
While traditional hyperscalers remain Nvidia's most dependable customers. Large-scale national AI investment programs increasingly underpin sovereign demand.
Startups like OpenAI, however, operate on tighter margins. Analysts say they’re far more exposed to capital market cycles—making their spending harder to sustain.
Still, Goldman revised its Nvidia revenue estimates upward, forecasting $294 billion in 2027 (vs. the previous estimate of $280 billion) and $349 billion in 2028, along with rising earnings per share and stable gross margins.
The Bottom Line
Nvidia's aggressive AI investment strategy is turbocharging demand and investor excitement, but as billions flow into companies like OpenAI and circle back as revenue, the line between smart growth and artificial inflation may be blurring.
Goldman Sachs is optimistic, for now.
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