Nvidia says two thriller clients accounted for 39% of Q2 income

Practically 40% of Nvidia’s second quarter income got here from simply two clients, in keeping with a submitting with the Securities and Trade Fee.

On Wednesday, the chipmaker reported report income of $46.7 billion in the course of the quarter that ended on July 27 — a 56% year-over-year enhance largely pushed by the AI knowledge middle growth. Nevertheless, subsequent reporting highlighted how a lot of that progress appears to be coming from only a handful of consumers.

Particularly, Nvidia mentioned {that a} single buyer represented 23% of whole Q2 income, whereas gross sales to a different buyer represented 16% of Q2 income. The submitting doesn’t establish both of those clients, solely referring to them as “Buyer A” and “Buyer B.”

Through the first half of the fiscal 12 months, Nvidia says Buyer A and Buyer B accounted for 20% and 15% of whole income, respectively. 4 different clients accounted for 14%, 11%, one other 11%, and 10% of Q2 income, the corporate says.

In its submitting, the corporate says these are all “direct” clients — corresponding to authentic gear producers (OEMs), system integrators, or distributors — who buy their chips instantly from Nvidia. Oblique clients, corresponding to cloud service suppliers and shopper web corporations, buy Nvidia chips from these direct clients.

In different phrases, it sounds unlikely {that a} huge cloud supplier like Microsoft, Oracle, Amazon, or Google may secretly be Buyer A or Buyer B — although these corporations could also be not directly accountable for that huge spending.

Actually, Nvidia’s Chief Monetary Officer Nicole Kress mentioned that “giant cloud service suppliers” accounted for 50% of Nvidia’s knowledge middle income, which in flip represented 88% of the corporate’s whole income, in keeping with CNBC.

What does this imply for Nvidia’s future prospects? Gimme Credit score analyst Dave Novosel instructed Fortune that whereas “focus of income amongst such a small group of consumers does current a big danger,” the excellent news is that “these clients have bountiful money readily available, generate huge quantities of free money movement, and are anticipated to spend lavishly on knowledge facilities over the subsequent couple of years.”