Nvidia (NVDA), the AI chip giant, received a credit-rating upgrade from S&P Global Ratings, citing “insatiable demand” for AI systems. The agency raised Nvidia’s long-term issuer rating to AA from AA-, reflecting its growing confidence in Nvidia’s role in the AI boom.
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Explore NVDS for 2X short leverage on NVDANotably, S&P Global Ratings is the credit-rating division of S&P Global. It is one of the three major credit-rating agencies, alongside Moody’s and Fitch Ratings.
S&P Expects Years of Strong Growth
S&P expects Nvidia’s revenue to rise 82% to $394 billion in fiscal 2027. The agency then forecasts another 38% increase to $544 billion in fiscal 2028. S&P said demand for Nvidia’s Blackwell chips remains strong. It also expects future products, including the Rubin platform, to help drive growth over the next few years.
Further, S&P said Nvidia’s mix of AI chips and software helps set it apart from rivals like Advanced Micro (AMD). The firm believes that advantage allows Nvidia to maintain its lead and charge higher prices for its products.
The agency also expects Nvidia’s free cash flow to reach $196 billion in fiscal 2027 and $276 billion in fiscal 2028. Those figures could give the company even more room to fund share buybacks, dividends, and future growth.
It’s important to highlight that during the most recent quarter, Nvidia approved an $80 billion share buyback program. The company also raised its quarterly dividend from $0.01 per share to $0.25 per share.
Risks Still Remain
Despite the upgrade, S&P highlighted several risks. Nvidia still relies heavily on TSMC (TSM) to make its most advanced chips. The agency also warned that AI spending could slow if companies face funding challenges or if power shortages delay new data center projects.
Even so, S&P said it expects Nvidia remain a leader in AI and keep building its cash position.
Is Nvidia Stock Still a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on Nvidia stock based on 37 Buys, one Hold, and one Sell assigned in the past three months. Furthermore, the average 12-month Nvidia price target of $311.41 per share implies 52% upside potential.
