Two customers accounted for 39% of Nvidia’s revenue in its July quarter, according to a recent financial filing.

The company reported that “Customer A” contributed 23%, and “Customer B” 16%, of total revenue in Q2, up from 14% and 11% year-on-year.

Nvidia did not identify the two customers but clarified they are “direct customers,” which refers to companies that purchase chips to build systems or circuit boards for resale, such as original design manufacturers or distributors.

The filing also noted that two indirect customers each made up over 10% of Nvidia’s total revenue, mainly buying through Customers A and B.

Nvidia said demand for its AI systems is strong across cloud service providers, enterprises, “neoclouds,” and foreign governments.

In Q2, the data center segment accounted for 88% of Nvidia’s revenue, with large cloud providers making up about half of that.

Nvidia’s CEO highlighted ongoing growth in AI infrastructure spending, but the identities of its largest customers remain undisclosed.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ Nvidia’s customer concentration puts it in high-risk territory by M&A standards

Nvidia’s 39% revenue dependence on just two customers places the company in what acquisition experts consider a vulnerable position.

Research on customer concentration shows that businesses deriving 30-50% of sales from a single customer face significant challenges during acquisition processes due to perceived risks2.

While Nvidia isn’t currently seeking acquisition, this concentration level signals potential vulnerability if either major customer reduces orders or switches suppliers.

The risk is amplified because these are “direct customers” who purchase chips to build systems for others, meaning Nvidia sits two steps removed from actual end users and has less control over final demand.

This customer dependence has grown substantially, with the top two customers representing just 25% of revenue in the same quarter last year compared to 39% now1.

2️⃣ Rising customer concentration reflects broader economic trend toward market dominance

Recent Nvidia developments