Nvidia says two unnamed customers made up 39% of Q2 revenue

Nvidia

Nvidia has revealed that nearly 40% of its second-quarter revenue came from just two customers, underscoring how dependent the chipmaker has become on a handful of big buyers.

In a filing with the US Securities and Exchange Commission, Nvidia disclosed that one customer accounted for 23% of revenue in the quarter ended July 27, while another contributed 16%. The company referred to them only as “Customer A” and “Customer B,” without disclosing their identities.

The chipmaker posted record quarterly revenue of $46.7 billion, up 56% year-on-year, fuelled by surging demand for its AI data centre products. In the first half of the fiscal year, Customer A and Customer B represented 20% and 15% of total revenue respectively. Four other customers accounted for between 10% and 14% each of Nvidia’s Q2 revenue.

Nvidia explained that these are all direct customers, such as system integrators, OEMs or distributors, who purchase chips directly from the company. Cloud service providers and internet companies typically buy Nvidia hardware through these channels rather than directly.

This suggests that major cloud players such as Microsoft, Amazon, Google, or Oracle are unlikely to be the mystery buyers, although their indirect purchases may still underpin Nvidia’s growth. Nvidia’s Chief Financial Officer Nicole Kress confirmed that “large cloud service providers” made up 50% of data centre revenue, which itself represented 88% of the company’s total revenue, according to CNBC.

While the concentration of revenue poses potential risks, analysts say the spending power of these buyers mitigates the threat. Dave Novosel of Gimme Credit told Fortune that although reliance on a small number of customers is a concern, “these customers have bountiful cash on hand, generate massive amounts of free cash flow, and are expected to spend lavishly on data centres over the next couple of years.”