Nvidia's record-breaking revenue growth is tempered by rising receivables and extended payment terms, prompting concerns over the sustainability of current demand levels.
Nvidia reported strong revenue and guidance but rising DSO and receivables raise concerns about demand quality.
Nvidia posted a stellar fiscal second quarter with $96.2 billion in revenue, marking a 106% year-over-year increase. Despite strong guidance, investors are scrutinizing a rise in days sales outstanding (DSO) from 45 to 60 days, signaling that customers are taking longer to pay amid the company's aggressive financing of AI infrastructure deals.
A rising DSO indicates that customers are taking longer to pay for products, which can signal potential cash flow issues or that the company is using flexible credit terms to artificially inflate demand.