Nvidia shares edged lower on Thursday, extending a recent pullback as the chipmaker unveiled a new revenue-sharing initiative aimed at broadening its customer base beyond tech giants like Alphabet and Amazon. The stock was down about 0.5% in premarket trading at $196.68 and opened at $197.58, struggling to hold the $200 level.
The core of Nvidia's new strategy is to support smaller AI cloud companies by providing credit and backing in exchange for a portion of their cloud revenue. CFO Colette Kress described the model as creating "a recurring, usage-linked earnings stream" that could help ease investor concerns about over-reliance on large one-time chip purchases. The move comes as Alphabet and Amazon increasingly develop their own custom AI chips, potentially reducing their dependence on Nvidia hardware over time.
The company has already put the model into practice with Australian firms SharonAI and Firmus, which have announced data center deals using Nvidia hardware under the revenue-sharing structure. This goes a step further than Nvidia's earlier investments in "neoclouds" like CoreWeave, as Nvidia now earns ongoing cloud revenue on top of product sales.
Despite the near-term stock pressure—shares are up just 5.9% year-to-date, well below the 52-week high of $236.54—Wall Street analysts remain bullish. Of 54 analysts covering the stock, 48 have a Buy rating, with a consensus price target of $303.84, roughly 54% above Thursday's opening price. The company recently reported strong earnings with EPS of $1.87 beating the $1.76 consensus, and approved an $80 billion buyback program alongside a dividend raise.
