TLDR
- Two unnamed customers now represent 39% of Nvidia’s Q2 revenue, up from 25% in the previous year
- Customer A accounts for 23% while Customer B represents 16% of total quarterly sales
- Cloud providers make up 50% of data center revenue, which comprises 88% of total company revenue
- Company projects $3-4 trillion AI infrastructure market by 2030
- Stock recovered after initial earnings volatility as AI demand remains strong
Nvidia disclosed that two mystery customers drove 39% of its second-quarter revenue. This represents a sharp increase from 25% in the same period last year.
The semiconductor giant’s SEC filing revealed Customer A contributed 23% of total revenue. Customer B accounted for 16% of quarterly sales.
These figures raise questions about customer concentration risk. Nvidia’s growth increasingly depends on a small number of large buyers.
The company declined to identify these major customers. Both are classified as “direct customers” who purchase chips to build systems for resale.
Direct customers include manufacturers like Foxconn and distributors like Dell. They sell completed systems to cloud providers and end users.
Customer Portfolio Expands Beyond Hyperscalers
Cloud service providers represent 50% of Nvidia’s data center business. Data center revenue makes up 88% of total company sales.
Two indirect customers also each account for over 10% of revenue. They primarily buy through the mystery Customers A and B.
An unnamed “AI research company” contributed meaningful revenue through both direct and indirect channels. This adds another layer to the customer puzzle.
CEO Jensen Huang emphasized demand diversification beyond traditional cloud providers. New customer categories include enterprises, foreign governments, and “neoclouds.”
AI Infrastructure Spending Surge
Huang outlined ambitious projections for AI infrastructure investment. The company forecasts $3-4 trillion in total spending by decade’s end.
Nvidia targets capturing 70% of costs for $50 billion AI-focused data centers. This includes graphics processing units and other semiconductor products.
The top four hyperscalers doubled capital expenditure in two years. Huang cited $600 billion in current year spending commitments.
Foreign governments represent another growth driver. Nvidia expects $20 billion in “sovereign AI” revenue this year.
Stock performance initially wobbled after earnings guidance. Shares quickly stabilized as investors viewed the results as temporary slowdown rather than fundamental weakness.
At nearly 8% of the S&P 500, Nvidia drives significant index movement. The exclusion of China sales from guidance leaves potential upside if trade tensions ease.
The company emphasized expanding customer base beyond hyperscalers. This diversification could reduce concentration concerns while maintaining growth momentum.
Finance chief Colette Kress confirmed large cloud providers continue driving AI system demand across multiple market segments.
