NVIDIA’s $18.5 Billion R&D Bet Faces a Credit Test

By Sophie Lindqvist

NVIDIA reported $18.5 billion in research and development expense for fiscal 2026, ended Jan. 25, 2026, up 43% from $12.9 billion in fiscal 2025 and more than twice fiscal 2024’s $8.7 billion.

First-half fiscal 2027 R&D expense reached $13.4 billion: $6.3 billion in the quarter ended April 26, up 58% year over year, and $7.1 billion in the quarter ended July 26, up 64%. The six-month total exceeded fiscal 2025’s entire $12.9 billion.

R&D expense fell from 14.2% of revenue in fiscal 2024 to 8.6% in fiscal 2026 and 7.3% in the latest quarter, keeping the expansion affordable while revenue holds.

Can customer debt sustain NVIDIA’s order book?

On Oct. 14, Gartner forecast that more than 80% of neoclouds—providers renting graphics-processing capacity—would cease independent operations by 2030. CoreWeave shares fell more than 15% that day, while yields on its bonds touched 15%.

On Nov. 10, CoreWeave reported $3.66 billion in third-quarter revenue, $207 million in operating income, $846 million in net interest expense and a $709 million net loss.

CoreWeave shares jumped 24.7% on Nov. 11, their best day since April 2025, after results beat estimates and management raised full-year guidance. CEO Michael Intrator said CoreWeave would not use the unsecured debt market “at current yields” and expected about $9 billion in customer prepayments and deposits over the next three months.

Alphabet sold a rare 100-year bond in February, part of a $31.5 billion global debt offering to accelerate AI infrastructure. On Oct. 29, it lost about $500 billion in market value, its worst day as a public company, after reporting $51.4 billion in quarterly capital spending against $42.3 billion in operating cash flow.

S&P cut Oracle to BBB-, one notch above junk, in July after disclosures of heavy capital spending, negative free cash flow and about $260 billion in data-center leases. Reuters reported in early November that banks were growing reluctant to take on more AI debt.

In a Nov. 6 note quoted by CNBC, Jefferies equity-strategy head Christopher Wood said: “The most plausible way the AI capex arms race will end is that the credit card will be taken away.”

The model developers financing that infrastructure are also spending beyond revenue:

• The Wall Street Journal reported that OpenAI’s third-quarter revenue rose about 50% to $10 billion, while its adjusted operating loss widened to $10.9 billion; its latest round raised less than half of a $30 billion target.
• SpaceX’s IPO filing said xAI, now part of SpaceX, lost $2.47 billion from operations on $818 million in first-quarter revenue.
• Anthropic came closest to breakeven, with a $567 million operating loss on $17 billion in third-quarter revenue.

How much is NVIDIA financing its own customers?

Customer distress would cost NVIDIA twice: lost orders and impaired investments.

NVIDIA invested an additional $2 billion in CoreWeave in January and agreed in 2025 to purchase residual unsold capacity through April 2032 under an order initially valued at $6.3 billion. OpenAI’s February funding announcement included $30 billion from NVIDIA and an expanded commitment to NVIDIA computing infrastructure.

In August, NVIDIA disclosed conditional guarantees capped at $105 billion supporting an Ohio data-center campus where OpenAI will deploy systems. The structure leaves NVIDIA exposed as investor, supplier and financial backer.

The filing for the quarter ended July 26 listed $36 billion in agreements to buy AI-cloud capacity that providers do not sell to other customers. The commitments shrink when other customers, or NVIDIA’s own R&D teams, use that capacity.

The same filing listed $20 billion in data-center leases NVIDIA expects to reassign to third parties and $3.5 billion in guarantees of AI-cloud partners’ lease obligations.

The R&D clause links procurement to internal lab compute: NVIDIA can absorb unused capacity, reducing what it must buy from providers.

The Information reported on Nov. 12 that Kress, then CFO, opposed a proposed $250 billion credit backstop for OpenAI. NVIDIA later split the arrangement; the signed Ohio guarantee carries a $105 billion cap.

What changes under interim CEO Colette Kress?

NVIDIA said on Nov. 12 that co-founder Jensen Huang resigned as CEO after reports of affairs, including one with a woman U.S. officials suspected of spying for China. The board named CFO Colette Kress interim CEO; Kress, CFO since 2013, retains the finance post during the permanent search.

Cantor Fitzgerald semiconductor analyst C.J. Muse cut his NVIDIA price target on Nov. 12, telling CNBC that the company had very talented people but maintaining its technology roadmap over five years would be the key. NVIDIA shares have fallen more than 25% over the past month.

What do earlier CEO exits show about R&D?

After Intel CEO Brian Krzanich resigned in 2018 over a past relationship with an employee, Intel named CFO Bob Swan interim CEO. Intel’s R&D held near $13.5 billion for three years after Krzanich left.

HP’s R&D