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

Practically 40% of Nvidia’s second quarter income got here from simply two prospects, based on a submitting with the Securities and Change Fee.

On Wednesday, the chipmaker reported file income of $46.7 billion through 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 shoppers.

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

In the course of the first half of the fiscal 12 months, Nvidia says Buyer A and Buyer B accounted for 20% and 15% of complete income, respectively. 4 different prospects 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” prospects — comparable to authentic gear producers (OEMs), system integrators, or distributors — who buy their chips instantly from Nvidia. Oblique prospects, comparable to cloud service suppliers and shopper web corporations, buy Nvidia chips from these direct prospects.

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

In truth, Nvidia’s Chief Monetary Officer Nicole Kress mentioned that “massive cloud service suppliers” accounted for 50% of Nvidia’s knowledge middle income, which in flip represented 88% of the corporate’s complete income, based on CNBC.

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