• Bernstein analyst Stacy Rasgon reaffirms Outperform rating and $275 price target, calling NVIDIA's rebuttal to critics 'sound and helpful.'
  • NVIDIA privately addressed bearish concerns about accounts receivable, working capital, and revenue circularity in a memo distributed to sell-side analysts.
  • The selective distribution has triggered a wave of investor inquiries seeking clarity on the company's financial explanations.

NVIDIA moved to quell mounting skepticism over its financial practices this week, issuing a detailed memo to analysts that pushes back against bearish arguments circulating on social media and in financial circles. The document, which has not been made public, directly addresses critiques of the chipmaker's accounts receivable, working capital management, product depreciation cycles, and potential revenue circularity.

The company's forceful rebuttal found a receptive audience in at least one prominent Wall Street firm. "We found the explanations generally sound and helpful," wrote Bernstein analyst Stacy A. Rasgon, who reaffirmed his Outperform rating and $275 price target on the stock. Rasgon noted that the memo provided a structured counter-narrative to concerns that have gained traction as NVIDIA's valuation has soared alongside its explosive revenue growth.

However, the decision to share the memo exclusively with sell-side analysts has created an information gap, leaving many institutional investors scrambling for details. According to people familiar with the matter, buy-side firms have been flooding their broker contacts with requests for the document or a summary of its contents, highlighting the intense scrutiny on NVIDIA's financial mechanics.

The memo's arguments land against a backdrop of staggering financial performance. NVIDIA's most recent quarterly results showed revenue surging to $57 billion, a 62% year-over-year increase, with data center revenue alone hitting a record $51 billion. The company's gross margins remain exceptionally high at over 73%, and it provided robust guidance for the current quarter of approximately $65 billion.

Efforts to reach NVIDIA for public comment on the memo were unsuccessful. The company's decision to address critics through a private channel, rather than a public filing or statement, underscores the delicate balance it faces in managing market perceptions without amplifying negative narratives. This approach is not uncommon for companies facing specialized accounting questions, but it can fuel further speculation when the subject is a stock as widely held as NVIDIA.

For now, analysts like Rasgon appear satisfied with the explanations. Whether that private reassurance will be enough to calm the broader market's nerves remains an open question, with many investors likely to press for more transparent disclosure in future earnings calls.