Nvidia Corp (NVDA)'s AI revenue comes from just a handful of buyers. CFO Colette Kress hopes to turn that customer concentration risk into recurring revenue by getting paid once for GPUs and again when they generate compute income.

Three direct customers generated 44% ($78.2 billion) of Nvidia's $177.8 billion revenue in the first half of fiscal 2027—up from two customers driving 35% a year earlier.

That rising concentration underscores how heavily Nvidia's growth relies on a handful of tech giants. Even as Data Center revenue surged 117% year-over-year to $89 billion last quarter, Nvidia is now pushing to broaden who consumes its compute, not just who buys its GPUs.

Nvidia Wants to Get 'Paid Twice'

Enter Nvidia's "neocloud" strategy.

Under the model, Nvidia sells data center infrastructure to AI cloud providers and backs them with cloud-service agreements to help finance capacity. In exchange, Nvidia takes a cut of the rental revenue when third parties use that compute.

CFO Colette Kress summarized the strategy on the earnings call: "In this model, we get paid twice—once on the hardware sale and again through the share of rental revenue."

By capturing that secondary stream, Nvidia moves from simply supplying AI infrastructure to sharing in the ongoing economics of AI demand.

The Customer Base Could Get Much Bigger

Nvidia expects non-hyperscaler businesses — including sovereign AI, regional neoclouds, enterprises, edge computing and air-gapped data centers — to represent roughly half of its Data Center business.

The company's neocloud agreements are designed to help unlock that market. Nvidia's commitments under the new model totaled $36 billion as of July 26. They typically span six years, and decline as third-party customers, or Nvidia itself, consume capacity.

That creates a potentially powerful feedback loop: Nvidia sells GPUs to expand the customer base, the expanded customer base drives utilization, and Nvidia gets another revenue stream from that utilization.

Why it Matters

For investors, the bigger story is not simply whether Nvidia can keep selling more GPUs. It is whether the company can turn its dominant hardware position into a recurring claim on the broader AI economy.

Watch neocloud utilization, revenue-sharing growth and the expansion of non-hyperscaler demand. If those accelerate, Nvidia's customer concentration could become less of a weakness — and another source of leverage.