Nvidia Q2 Revenue: Two Customers Account for 39%

Nvidia's Revenue Concentration

Recent filings with the Securities and Exchange Commission reveal that approximately 39% of Nvidia’s revenue for the second quarter originated from only two clients.

The chip manufacturer announced record revenue of $46.7 billion for the quarter concluding July 27th, marking a substantial 56% increase compared to the previous year. This growth is primarily attributed to the surge in demand within the AI data center sector.

Key Customer Dependence

Nvidia disclosed that a single customer accounted for 23% of its total Q2 revenue. Sales to a second customer comprised 16% of the same quarter’s revenue. The identities of these significant purchasers, designated as “Customer A” and “Customer B,” were not revealed in the filing.

Throughout the first fiscal half, Customer A and Customer B collectively represented 20% and 15% of Nvidia’s overall revenue, respectively. Furthermore, four additional customers contributed 14%, 11%, 11%, and 10% to Q2 revenue, according to the company’s report.

Direct vs. Indirect Customers

The company clarified that these are all direct customers. This includes original equipment manufacturers (OEMs), system integrators, and distributors who procure chips directly from Nvidia.

Conversely, indirect customers – such as cloud service providers and consumer internet companies – acquire Nvidia chips through these direct channels.

Therefore, it appears improbable that major cloud providers like Microsoft, Oracle, Amazon, or Google are directly identified as Customer A or Customer B. However, their spending may indirectly contribute to the substantial revenue figures.

Cloud Provider Influence

Colette Kress, Nvidia’s chief financial officer, indicated that “large cloud service providers” constituted 50% of Nvidia’s data center revenue. This data center revenue, in turn, accounted for 88% of the company’s total revenue, as reported by CNBC.

Future Implications

Analysts at Gimme Credit suggest that while this concentration of revenue among a limited number of customers presents a notable risk, the financial strength of these clients is reassuring.

Dave Novosel of Gimme Credit stated that these customers possess substantial cash reserves, generate significant free cash flow, and are projected to continue investing heavily in data centers over the next several years.

• Customer A: 23% of Q2 revenue
• Customer B: 16% of Q2 revenue
• Large Cloud Providers: 50% of data center revenue