Tech Analyst Raises Red Flags Over Nvidia's Heavy Dependence On Just Four Customers For Q2 Revenue: 'Highly Unusual For A Company'

Nvidia Corp. NVDA reported $30 billion in revenue for the second quarter, with nearly half coming reportedly from just four customers.

What Happened: According to an SEC filing, these four clients accounted for 46% of the Jensen Huang-led chip giant’s total second-quarter revenue, approximately $13.8 billion. The identities of these customers remain undisclosed, as there is no legal requirement for Nvidia to reveal their names, Business Insider reported on Thursday.

However, tech analyst Gil Luria from D.A. Davidson speculated that the customers are likely Microsoft, Meta, Amazon, and Google, all of which are significantly increasing their GPU inventories for AI development. Luria noted that it is “highly unusual for a company” of Nvidia’s size to depend so heavily on a few clients.

Luria emphasized that this customer concentration should be a primary concern for investors over the next couple of years due to potential shifts in demand and increasing competition from in-house chip developments by these tech giants.

Another analyst, Jacob Bourne from Emarketer, mentioned that while this revenue concentration is unusual, it is not unexpected for companies offering specialized products like GPUs. Nvidia’s historical filings show similar trends, with a significant portion of revenue coming from a few customers.

Nvidia, Microsoft, Meta, Amazon have yet to respond to Benzinga’s queries.

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Why It Matters: This heavy reliance on a few customers comes at a time when Nvidia is facing significant market challenges. Recently, the company experienced a massive $279 billion loss in market value, which has raised concerns about its future performance. This sharp decline followed the release of its quarterly financial results, highlighting the volatility surrounding Nvidia’s stock.

Additionally, despite its dominance in the AI sector, Nvidia is not a favored investment for over half of the members of the ultra-wealthy network, Tiger 21. This indicates a lack of confidence among some of the most influential investors.

Moreover, investor sentiment has been shaky due to hyped-up expectations and potential delays in product releases, such as the anticipated Blackwell GPUs. Analysts had been optimistic about Nvidia’s ability to meet these high expectations, but recent market reactions suggest otherwise.

However, financial commentator Jim Cramer attempted to calm investor fears, emphasizing that the market has been driven by a handful of stocks, including Nvidia. He suggested that a broader economic slowdown might be necessary to prompt Federal Reserve rate cuts, which could stabilize the market.

Read Next:

• Nvidia Set To Reach $10 Trillion Valuation As Blackwell Expected To Propel Chip Maker With ‘Fireworks Again’ In 2025, Analyst Predicts

Image via Flickr/ Hillel Steinberg

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari