Nvidia's Next Test Is Capital, Not Capacity: Melius Cuts Target as DOJ Scrutinizes Hugging Face
Published on 11/04/2026 at 10:11 | Editorial boerse-global.de
Nvidia's pipeline of AI build-outs is no longer the only thing investors are being asked to underwrite. Two separate developments this week have shifted attention toward how the company and its partners will pay for that expansion — and toward the regulatory path of its largest pending acquisition.
Melius Research reaffirmed its buy rating on Nvidia on Monday but lowered its price target to $315 from $420. The brokerage flagged the potential volume of securities issuance by large technology companies to fund their AI spending as a key market risk, warning that financing hedges could weigh on valuation multiples through 2028. The stance is not contradictory: the firm remains constructive on the equity while applying a lower valuation yardstick.
Meta Deal Blends Technology and Capital
The funding question is embedded in Nvidia's own dealmaking. Roughly a week ago, the company said it would invest $3 billion in Meta's share offering. Meta, for its part, plans broader deployment of NVIDIA Vera Rubin and Vera CPUs along with additional networking components.
That announcement came on 27 October, when the two companies unveiled an expanded collaboration covering Meta's Muse model family. Nvidia is thus acting as more than a technology supplier — it is also taking a stake in the equity sale that helps finance the build-out.
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Infrastructure plans run in parallel. Nvidia and Oracle disclosed roughly a week ago that they would scale OCI Superclusters built on NVIDIA Vera Rubin NVL72 to multi-gigawatt size, with the systems and Vera CPUs now generally available on OCI. The partnership pairs technology already in service with ambitions that have yet to be converted into revenue.
Washington Turns to Hugging Face
Competition authorities have entered the picture. Reuters reported on 28 October that the US Department of Justice has sought information on the competitive implications of Nvidia's planned acquisition of Hugging Face, a deal valued at $12.93 billion. Closing is expected in the first half of 2027, according to Reuters, leaving the transaction a proposal rather than a completed purchase.
The inquiries concern the deal's competitive effects and should not be conflated with the operational expansion. Announced partnerships do not prove the acquisition will close, and the Justice Department's fact-finding does not amount to a decision against the transaction.
Cloud Partners and an Unconfirmed China Rule
A further constraint has surfaced around cloud customers. The Financial Times reported that Nvidia has instructed clients to sell at least 51% of their services to non-Chinese companies. Reuters said it could not immediately verify the report, so the claimed requirement cannot be treated as confirmed company policy.
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17 November Becomes the Anchor
The next confirmed financial marker is Nvidia's conference call on third-quarter results for fiscal 2027, announced on 28 October and scheduled for 17 November 2026. The reporting period ended on 25 October.
Until then, the planned acquisition, the announced infrastructure expansion and the reported customer directive sit on distinct footing. The quarterly figures will offer the first hard read on the economics behind the expansion — though they will neither close the Hugging Face deal nor settle the Justice Department's review.
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