TLDR:
- Nvidia stock slipped in premarket trading despite Alphabet’s strong earnings
- Alphabet’s increased capital expenditure ($13.1B, up 62%) signals potential growth in AI chip demand
- AMD’s forecast showed slightly lower revenue expectations for Q4
- 46% of Nvidia’s Q2 revenue came from just four major customers
- Major tech companies are planning massive AI infrastructure spending (Microsoft: $55.7B, Amazon: $60B, Meta: up to $40B)
Nvidia’s stock showed a slight decline in premarket trading Wednesday, dropping 0.6% to $140.40, even as the broader market indicated positive movement with S&P 500 futures rising 0.2%. This movement comes amid mixed signals from major tech earnings reports and revelations about Nvidia’s customer concentration.
Tech giant Alphabet delivered impressive third-quarter results, beating both profit and revenue expectations. The company’s capital expenditure reached $13.1 billion, marking a 62% increase from the previous year. This surge in spending suggests a deeper commitment to expanding AI and cloud-computing capabilities, potentially benefiting Nvidia as a key chip supplier.

However, AMD’s latest earnings report presented a more cautious outlook. While meeting Wall Street’s expectations for the current period, the company projected lower-than-anticipated revenue for the upcoming December quarter, raising questions about the sustainability of AI chip demand growth.
Nvidia’s recent financial disclosures reveal a notable concentration in its customer base. Four unnamed customers accounted for 46% of the company’s total revenue in the second quarter of fiscal 2025, which ended July 28. Individual contributions ranged from 10% to 14% per customer.
The company’s data center segment generated $26.3 billion in revenue, showing a 154% increase year-over-year. This growth has helped push Nvidia’s market capitalization from $360 billion at the start of 2023 to over $3.4 trillion currently.
Major technology companies are making substantial investments in AI infrastructure. Microsoft has allocated $55.7 billion to capital expenditures in fiscal 2024, while Amazon’s spending is expected to exceed $60 billion in calendar 2024. Meta Platforms plans to invest up to $40 billion in AI infrastructure in 2024.
Alphabet’s CFO indicated expectations for substantially increased capital spending in 2025, suggesting continued strong demand for AI chips. While Nvidia doesn’t publicly disclose its customer list, industry analysts believe it counts many of these tech giants among its largest clients.
The pricing of Nvidia’s products remains a barrier for smaller companies. A single leading GPU can cost up to $40,000, with thousands often needed for AI model training. This has led to a concentration of buying power among wealthy tech companies and top AI startups.
Nvidia’s new Blackwell-based GB200 GPU systems offer improved cost efficiency, performing AI tasks 30 times faster than previous H100 systems while maintaining similar pricing. However, widespread adoption by smaller businesses remains years away due to cost constraints.
Competition in the AI chip market is increasing. AMD launched its own data center GPUs last year and plans to introduce new chip architecture in the second half of 2025. Additionally, major tech companies like Microsoft, Amazon, and Alphabet are developing their own data center chips.
Looking ahead, Nvidia CEO Jensen Huang projects that data center operators will invest $1 trillion in AI infrastructure over the next five years. This forecast suggests potential for continued growth, despite the concentrated customer base.
Current market indicators show mixed signals for Nvidia’s immediate future. While Alphabet’s strong earnings and increased spending plans point to robust demand, AMD’s conservative forecast adds a note of caution.
Microsoft and Meta Platforms are set to report their earnings on Wednesday, which could provide additional insight into demand for Nvidia’s graphics processing units and the overall health of the AI chip market.
Oracle has committed $6.9 billion to AI capital expenditure in its fiscal 2024, with plans to double that investment in fiscal 2025. Tesla has announced over $11 billion in AI infrastructure spending this year, including the deployment of 50,000 Nvidia GPUs.
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