Nvidia’s financial success driven by just a handful of major clients

Nvidia has reported skyrocketing revenues in its second financial quarter. However, the filings reveal the tech giant’s heavy reliance on a few major clients.

Nvidia, currently the largest company by market capitalization in the world, valued at around $4.2 trillion, reported that its Q2 revenues grew by 56% from a year earlier, reaching $46.7 billion.

Just two direct customers generated 39% of the revenues, Nvidia said in a filing with the Securities and Exchange Commission.

Both customers were attributed to the Compute and Network segment, which might hint at major cloud service providers or AI developers. Nvidia says it sells products to add-in board manufacturers, distributors, original device manufacturers, and system integrators.

Sales to one direct customer, Customer A, represented 23% of total revenue,” the report reads. “Sales to a second direct customer, Customer B, represented 16% of total revenue.”

Nvidia estimates that an “AI research and deployment company” contributed to a meaningful amount of its revenue, through various direct and indirect customers.

“We have experienced periods where we receive a significant amount of our revenue from a limited number of customers, and this trend may continue,” the quarterly report reads.

This reliance seems to be increasing over time. Two customers represented 35% of Nvidia’s revenues in the first half of its fiscal year.

Moreover, Nvidia said customers owe it $27.8 billion for already delivered products (accounts receivable at the end of Q2). Three direct customers accounted for 56% of this sum, or 23%, 19% and 14% respectively.

“Blackwell is the AI platform the world has been waiting for, delivering an exceptional generational leap – production of Blackwell Ultra is ramping at full speed, and demand is extraordinary,” said Jensen Huang, founder and CEO of Nvidia.

The geographic distribution of the revenues reveals that Europe is almost nonexistent among direct Nvidia customers. In Q2, revenue from sales to customers in the US accounted for 50%, Singapore represented 22%, Taiwan 18%, China 6%, and others accounted for the remaining 4%.

For every $100 in sales, the company expects to make $73 in gross profit this year.

Despite record results, Nvidia’s share price retreated by around 4% after the announcement.