S&P Global Ratings has upgraded Nvidia’s long-term issuer credit rating from “AA-” to “AA”, citing continued strong demand for artificial intelligence systems. The upgrade reflects the chip giant’s sustainable competitive advantages within the rapidly expanding data center ecosystem, as well as its exceptional ability to generate cash flow.

S&P Global forecasts that Nvidia’s revenue will surge 82% in fiscal 2027 to approximately US$394 billion, followed by a further 38% increase in fiscal 2028 to around US$544 billion. This explosive growth is expected to be driven by the company’s successful transition to the Blackwell GPU platform and a clearly defined roadmap for its next-generation Rubin architecture.

Nvidia’s platform-centric strategy allows the company to maintain significant pricing power while further strengthening its competitive moat against rivals such as Advanced Micro Devices (AMD). As operating margins continue to improve and capital expenditure intensity remains relatively low, Nvidia’s free operating cash flow is expected to reach US$196 billion in fiscal 2027 and increase further to US$276 billion in fiscal 2028.

The company’s substantial liquidity position enables it to aggressively return capital to shareholders. Nvidia recently increased its share repurchase authorization to US$80 billion and raised its dividend payments. At the same time, Nvidia has made substantial prepayments to Taiwan Semiconductor Manufacturing Company (TSMC) in order to secure advanced manufacturing capacity, further strengthening the stability of its supply chain.

Despite the rating upgrade, S&P Global also highlighted several significant risks facing Nvidia. These include the company’s heavy geographic and supplier concentration exposure to Taiwan and TSMC. In addition, the broader AI infrastructure buildout still faces potential challenges, including tighter capital market conditions and power supply constraints affecting data center development.

Market Analysis

The stable outlook accompanying the rating upgrade indicates that S&P Global expects Nvidia to maintain its leadership position and further strengthen its already robust balance sheet.

S&P Global also noted that any future rating upgrades would likely require Nvidia to reduce its dependence on outsourced manufacturing concentration while continuing to maintain a net cash position.