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Nvidia's Reliance on Top Customers Raises Concerns for AI Growth
8 Sep
Summary
- Nvidia's top customers are cloud providers and tech giants
- Broadcom also heavily dependent on a few major hyperscalers
- Potential slowdown in hyperscaler spending could impact Nvidia and Broadcom
As of September 2025, Nvidia and Broadcom are facing a growing reliance on a small number of major customers, primarily hyperscalers and tech giants, to drive their AI semiconductor sales. Nvidia has reported that companies like Foxconn, a major electronics manufacturer, are adopting its new RTX Pro Servers for AI workloads. Meanwhile, Broadcom has disclosed that over 32% of its revenue in the fiscal third quarter is coming from AI semiconductor sales, with a large fraction of that tied to just a few customers.
The article suggests that the same "cast of characters" - likely referring to the top cloud providers and tech firms - are driving growth for both Nvidia and Broadcom. This concentration of key customers poses a risk, as a potential pullback in capital expenditures by these hyperscalers could significantly impact the semiconductor firms. Currently, these companies are in an expansion phase, but the cycle may eventually shift towards generating more free cash flow, which could affect Nvidia and Broadcom as the primary beneficiaries of this spending.
While Nvidia remains a foundational AI growth stock, the article cautions that these cyclical gyrations in customer spending could lead to choppy stock price movements for the company. Broadcom is also working to expand its customer base beyond the three major hyperscalers that have been its top contributors, aiming to convert two additional prospects into revenue-generating customers by 2027.
