Nvidia's Mysterious Revenue...

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0:29That would be crazy, Tammy, but you got surprisingly affordable renter's insurance through Geico, so it could be covered, giving you peace of mind. Aw, I love a story that ends well. Next up, love stories. Are they all they're cracked up to be? It feels good to worry less. It feels good to Geico. NVIDIA says that two mystery customers accounted for 39 % of its Q2 revenue, which is absolutely insane. If you've been following NVIDIA, you know their current valuation and revenue is absolutely astronomical. So today we're going to talk about, we're going to speculate maybe who that might be and talk about the implications.

1:03But before we do, Jayden, why don't you tell them about our school community? So every single week, Jamie and I release a piece of content on our school community. We've been doing this for over a year now. So we have over 60 videos where we basically break down how we're currently using AI to grow and scale our businesses. Think of this as basically a masterclass in taking your business to the next level. If you're interested in a side hustle or making money online, the strategies and tools that teach you how to do that. This week, I broke down basically all of my strategies and the distribution tools I use to make thousands of dollars from music on Spotify.

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2:50We have amazing content slated in the future. We already know what our next episode's on, and we have over 60 episodes in the past. So go check it out. And yeah, we'd love to have you as a member with over 300 members. The link's in the description. All right, let's get into NVIDIA. So I think the crazy thing, Jamie, you mentioned that it's, you know, 39 % of their Q2 revenue that's coming from just two customers. But I think not a lot of people know just how much money that is. So that is basically in Q2, they reported$46.7 billion, which is huge. And that's, you know, up 56 % year over year.

3:27Most of this is basically driven by the AI data center boom. But what's really interesting in all of that is who their actual customers are. So, you know, we mentioned 39 % is from two customers, but one of the customers in particular is actually 23 % of their total revenue. That is insane for a company with over a trillion dollar market cap to have 25 % of their revenue in a given quarter coming from basically a quarter of the revenue coming from one specific company. That's insane because that company could move their business elsewhere or they could decide to stop to buy or that company becomes insolvent.

3:59It's all sorts of things that could happen. So a lot of people are saying that this is a big risk. Now, people are saying, you know, what the heck is this company? They don't actually identify it. So 23 % comes from one, 16 % comes from another company. So basically, these two companies account for a huge chunk of it. And they're just identified as customer A and customer B. They don't actually say who these customers are. Now, a lot of people are wondering, and I think a really easy assumption on who it could be would be that it's Oracle or Amazon or Google or Microsoft, right? These are the big, huge companies.

4:31And I think those are kind of like a no-brainer. But what's interesting is those companies don't actually buy directly from NVIDIA. They go through third parties to buy their chips. So it's actually not one of these big, huge companies that you're very familiar with that's buying this, which is it kind of adds to a lot of the, I don't know, a lot of the intrigue around it. So NVIDIA's chief financial officer, Nicole Kress, said, quote, large cloud service providers, which account for 50 % of NVIDIA's data center revenue, are basically not the ones that are buying these chips. And so basically what this means for NVIDIA's future prospects is that, so give me credit analyst Dave Novosel, he was talking to Fortune and he said, quote, basically that while concentration of revenue among such a small group of customers does present a significant risk.

5:23He said, basically, the good news is that, quote, these customers have bountiful cash on hand, generate massive amounts of free cash flow, and are expected to spend lavishly on data centers over the next couple years. So my speculation on where this all is, and we're going to get into different ways we think you can make money from this and different ideas around all of this. But my speculation on basically who this is that spending that insane amount of money, if it isn't Microsoft, Amazon or Google, is that it is probably governments and actual countries that are spending money. You can see a lot of different companies or countries that have announced big investments, countries like India, countries like the UAE.

6:01A lot of people want to become data center, big data center hubs. And I was recently doing a podcast on my AI chat podcast where I was talking to someone who in the last nine months has scaled up to seven different data centers. Their organization has seven different data centers. and what's interesting is that he basically said you know he's based out of Europe and he's like Europe doesn't want to just rely on American data centers or data centers in other countries every country wants to basically because they know that AI runs off of this and that this is how you you stay competitive they want to become data center independent and so I think right now we're going to see NVIDIA making a ton of money by basically all of the countries in the world are wanting to build their own big data center projects and they will be spending a lot of money to do that.

6:48So that's probably where my assumption of where this is coming from. That's very interesting. And that makes sense as far as their revenue growth year over year. It's 56 % up is that all these countries would want to build their own data centers and to compete against each other. Do you think that will... I mean, in my mind, that has to plateau at some point or even decrease as far as their revenue, I don't think is going to keep building that much per year. Do you see a point where their sales slow down? Or do you think everyone is going to be implementing all this AI technology and it's going to all be used and more and more data will be needed?

7:29Basically, I think, personally, my case, which of course is not financial advice, and I'll get into a whole bunch of concepts that people have talked about in investing strategies in this space. But of course, none of this is financial advice. It's all entertainment purposes only. But my basic assumption is that we won't actually see a big drop. Now, of course, there could be something like that triggers a big black swan event, or every, you know, the stock market crashes and every company crashes. And if that happens, I think, yes, of course, we would see a slowdown in spending. But basically, given the current trajectory of the market, we've seen that heavy investments went from like startups and software companies to basically big, huge companies like Google and Microsoft who now have their own data centers and compute platforms, their own cloud platforms, Microsoft Azure and Google Cloud and Amazon Web Services.

8:17Those are like the huge spenders of buying these NVIDIA chips for training. And now those companies are, I don't want to say they run out of money, but like there's only so much money and investors and CapEx. And now it feels like we're moving towards the next phase, which is like entire countries that are buying these data centers. And I think maybe eventually you'll get even bigger to maybe like conglomerates like the European Union will buy them like combined and stuff. So and I guess we are seeing a little bit of that anyways, right now, and for the last few years, but I think that's gonna be a bigger trend, where basically, we're gonna get to these bigger and bigger buyers that view this as a strategic advantage, maybe they're concerned about the risk of, you know, China's AI supremacy, and they want to be able to compete with them.

8:59And, you know, all sorts of reasons that I think, basically, I don't think NVIDIA is going to slow down, I think, AI is going to need, it's going to be so chip hungry. And it's going to be so data hungry, basically, these data centers, these chips, I think we're just going to keep selling more and more of them, which is crazy to think about. But that's basically my assumption. And yeah, I think I don't think Nvidia, I think Nvidia has a really strong place. So I don't think they're actually getting they're going to get disrupted anytime super soon. I think it's a pretty strong company. They're they're quite advanced, we see a lot of other players, we see like meta saying they want to build chips and google building their own chips and so i think there's going to be definitely competitors there but nvidia has such a good was such a strong lead and to be able to build a chip and spin up a whole chip fab is so expensive and takes so much time that by the time it's done nvidia just feels like they're leaps and bounds ahead and also um you know nvidia i think it's fair to say a lot of people just call them a taiwan semiconductor company wrapper because they're basically getting very advanced chips and wafers from tsmc and And they're adding them into their own GPUs and stuff.

10:06But like NVIDIA isn't just cooking, like isn't making everything themselves. So there is like a whole supply chain that helps feed this ecosystem. And TSMC, there's a company, I think a Dutch company that makes some of the really advanced parts or has basically pioneered some really advanced technology there that is almost impossible to replicate. So there's like some very interesting, also fragile feeling parts of this whole ecosystem. So that's kind of why it can charge a premium and it's so expensive, but very high tech, very crazy. If you look at just like the, yeah, the detail and attention to detail needed to make these chips, it's insane.

10:38But I think NVIDIA is going to keep making money for a long time. And I think that their clients are just going to get bigger and bigger. But the question becomes, what happens when they reach the top of the pyramid and every country in the world has become their client? Like at some point the growth stops, doesn't get any bigger than that. So yeah, it's, it's kind of crazy to think about, but my, my case on is I'm pretty bullish on it still. Okay. There you have it. That's, that's Jaden's opinion. and he's a little bullish on NVIDIA. I think that's a pretty solid argument. Anyways, if you appreciated this episode or got any value out of it, be sure to leave us a rating or review wherever you're listening.

11:10Those really help us out and give us some good feedback on how to improve the podcast. Also, again, check out our AI Hustle School community if you are interested in making money using AI or growing your business. Thanks for listening and we'll see you next time. Looking for excitement? Chumba Casino is here. Play anytime, play anywhere. Play on the train, play at the store, play at home, play when you're bored. Play today for your chance to win and get daily bonuses when you log in. So what are you waiting for? Don't delay. Chumba Casino is free to play. Experience social gameplay like never before.

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