Nvidia's 70% revenue forecast sparks SpaceX

Nvidia expects its revenue to grow by more than 70% in the fiscal year ending in January 2028. This "shockingly bullish" outlook, as described by one analyst, has Wall Street questioning if SpaceX's plan to use only Nvidia's data-center chips is a primary reason for the forecast.

Mizuho analyst Daniel O'Regan asked in a client note whether the forecast is "simply a function" of SpaceX's exclusive commitment. With SpaceX aiming to deploy close to 10 gigawatts of computing power by the end of next year, the company is becoming increasingly relevant to Nvidia, according to Kate Leaman, chief market analyst at AvaTrade.

SpaceX CEO Elon Musk has said his company expects a significant share of Nvidia's upcoming Rubin chips next year. Leaman noted this "underlines just how material the relationship is becoming."

The Deepening Partnership

While the companies have worked together for roughly a decade, their ties are strengthening. Nvidia is both a major supplier to and an investor in SpaceX, owning $21 billion of the company's stock as of June 30. According to Gene Munster of Deepwater Asset Management, SpaceX accounted for 5% of Nvidia's fiscal second-quarter revenue, up from 3% in the prior quarter.

Despite this, Leaman cautions against tying Nvidia's growth too closely to a single customer. She points to Nvidia's broad customer base. Hyperscaler customers drove $49 billion of its $89 billion in data-center revenue last quarter. Sovereign AI efforts, neoclouds, enterprises, and startups are also driving large parts of the business.

"That's a lot of demand coming from a lot of directions," Leaman said in emailed comments to MarketWatch.

Financing the AI Build-Out

A major question is how SpaceX will finance its massive computing goals. Mizuho estimates the company will need between $300 billion and $500 billion to meet its 2027 compute target, and analysts expect it to lean heavily on debt.

Earlier in August, Nvidia announced a partnership with financial firms Apollo Global Management, Blackstone, and Goldman Sachs to raise over $500 billion in third-party capital. The stated aim is to finance the AI infrastructure build-out across Nvidia's "ecosystem," including frontier AI labs. Mizuho questioned if this effort was targeted at SpaceX.

Kevin Cook of Zacks Investment Research said Nvidia's aim to make its graphics processing units an investable asset class offers a case for the strong revenue guidance. The partnership members want sovereign nations and enterprises to build their own AI offerings, which would expand Nvidia's market.

Morningstar analyst Brian Colello suggested it's possible to think of Nvidia's computing infrastructure like a car: it can be financed by a customer, repossessed, and sold to another. Nvidia's management has stated its revenue forecast factors in insufficient supply to meet all demand, estimating the cloud-industry backlog is now above $2 trillion.

Leaman called the SpaceX exclusivity "a real competitive signal." However, she concluded that the broader AI race will focus on whether supply can catch up with overwhelming demand. Neither Nvidia nor SpaceX immediately responded to MarketWatch's requests for comment.