Seaport Global Securities reaffirmed its Sell rating on NVIDIA (NASDAQ: NVDA) and maintained a $140 price target, arguing that the chipmaker faced mounting competitive pressures and growing financial risks tied to the steps it was taking to defend its market position.

The firm said Nvidia had increasingly depended on a range of sales and financing mechanisms to address rising competition, noting that many of these actions were not fully visible in the company's reported financials and were likely to become even more significant in the coming year. According to Seaport, Nvidia's existing $26 billion in cloud compute service agreements—which the company characterized as support for R&D and its DGX platforms—effectively operated like rebates. The firm estimated that if these were recognized as such, they could pressure gross margins by roughly 400 basis points next year, or reduce earnings by at least $0.30 per share.

Seaport also pointed to Google's growing success in promoting third-party workloads on its internally developed TPUs, which the firm said demonstrated performance advantages over Nvidia systems in certain use cases. The analyst further highlighted Nvidia's substantial balance-sheet commitments, including $6 billion invested in private companies this year and an additional $17 billion in outstanding commitments—among them $5 billion to Intel. The firm added that a potential agreement with OpenAI, though not yet finalized, could add as much as $100 billion more to the list.

The report noted a sharp increase in Nvidia's working capital during the quarter. While management attributed the build-up to robust demand, Seaport interpreted part of the rise as Nvidia helping smooth cash-flow needs for its manufacturing partners.

Despite Nvidia's strong reported results, the firm said these competitive and financial pressures justified maintaining a bearish stance on the stock.