Has NVIDIA lost focus ahead of Thursday's earnings?

Has NVIDIA lost focus ahead of Thursday's earnings?

Two weeks ago to the day, on 11 August, NVIDIA CEO Jensen Huang, sharing a desk on CNBC with the heavyweights of private capital, Apollo, Blackstone, BlackRock, Brookfield, Goldman Sachs and KKR, unveiled a $500 billion compute-financing push.

The idea was framed as something new: treating AI compute and data-centre infrastructure as a distinct investable asset class, much like commercial real estate or toll roads. The aim was to let hyperscalers, frontier AI labs and enterprises fund NVIDIA hardware without loading up their own balance sheets.

Watching the interview, it was hard not to be impressed by the calibre of the institutions at the table and the sheer optimism around artificial intelligence (AI), energy, compute and infrastructure.

Yet, as noted in my morning note to clients, I wondered whether this was how it felt when sub-prime mortgages first became a mainstream product, the innovation that ultimately helped trigger the Global Financial Crisis (GFC). After all, a toll road generates dependable cash flows over 30 years. A high-performance graphics processing unit (GPU) has a useful life of perhaps five years, if that, before NVIDIA's own innovation renders the previous generation of chips obsolete.

Weekend reports that NVIDIA is in talks to invest in Perplexity at a valuation above $30 billion have provided yet another eyebrow-raising moment. Adding to existing equity stakes in CoreWeave, Nebius and Fireworks, NVIDIA is seeking to construct a self-reinforcing loop in which it supplies the hardware, backstops the debt and holds exposure to the growth of its own buyers.

The broader market is starting to price in these structural risks. When details of an initial $250 billion guarantee for OpenAI's build-out emerged last month, pushback from NVIDIA's own shareholders forced the commitment to be cut to under $120 billion.

At the same time, and as viewed on the chart below, NVIDIA's credit default swap (CDS) spreads have widened to record highs near 85 basis points (bp). A CDS is essentially insurance against a company defaulting on its debt. When the cost of that insurance rises, it signals that investors see higher credit risk.

NVIDIA credit default spread chart

In the equity space, NVIDIA's own share price is now reflecting that rising anxiety. After touching an all-time high of $227.92 shortly after the 11 August announcement, NVIDIA has since suffered seven consecutive sessions of declines, its longest losing streak since September 2022.

While some of this slide reflects typical pre-earnings hedging, it also raises a deeper question: is NVIDIA better served staying firmly in its lane, focusing on chip design and supply, and curtailing its ambition to act as the central bank and backstop of the AI ecosystem, which is creating unnecessary balance-sheet pressure?

NVIDIA remains the undisputed engine of the AI hardware boom, and Thursday morning's second quarter (Q2) report (Sydney time) will almost certainly deliver another round of eye-popping revenue numbers. You can read my colleague in London, Axel Rudolph's, earnings preview here.

Yet with lingering questions around AI and the circular financing deals surrounding NVIDIA, the central question for investors is no longer simply whether NVIDIA beats quarterly estimates. It is whether the company has lost focus by attempting to finance the very revolution it created.

NVIDIA technical analysis

NVIDIA's share price rallied an impressive 150% from its April 2025 low of $86.62 to a peak of $236.54 on 14 May 2026, before sliding into a correction that has persisted for more than three months.

So far, the pullback has held mostly above key support around the $190 level, reinforced by the 200-day moving average now at $195.34. However, the correction resembles an incomplete three-wave 'abc' Elliott Wave correction (after a five-wave advance), leaving open the possibility of one final leg lower towards the $180 zone to complete the correction.

Basing near $180 followed by a sustained rebound back above the 200-day moving average would be viewed as a sign the correction is complete and the uptrend has resumed. Aware that a sustained break below support at $180ish would indicate a deeper decline towards $156.50 is underway.

NVIDIA cash daily chart

• _{Source: TradingView. The figures stated are as of 25 August 2026. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}