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Throughout this earnings season, investors have been paying particular attention to capital spending by big technology companies.
The spending is being seen as a barometer of how bullish Microsoft, Amazon, Meta and Alphabet are about what AI will bring to them. But as Julie Hyman wrote Thursday, the picture is a bit more complicated than that, because they’ll have to give it their all just to get a seat at the table.
However, the nature of supply chain dynamics means that it collects in the mountains and melts, which then ends up in rivers and lakes.
And as this week’s chart shows, Big Tech is still making it rain. And Nvidia is the lake.
More than 40% of Nvidia’s revenue comes from well-known names among the “Magnificent Seven” stocks, including Microsoft, Meta, Alphabet and Amazon, according to Bloomberg estimates and quarterly reports.
The biggest transfer came from Microsoft, with spending from the world’s most valuable company accounting for 19% of Nvidia’s revenue. This makes it by far its largest customer, nearly double Meta’s spending and triple the spending of Alphabet and Amazon.
And on Microsoft’s side, Nvidia accounts for 45% of the company’s capital expenditures, according to Bloomberg data, while the chipmaker accounts for just 15% of Alphabet’s spending.
In the AI jungle, the data is a reminder that chipmakers will be in first, long before hyperscalers can offer investors more than hints about when their AI investments will turn into AI revenue streams.
Still, this is one of the key charts that has helped fuel the market through earnings season, especially for tech companies.
For now, the revenue shortfall isn’t a big worry for investors, but doubts are growing because it’s hard to imagine that trillion-dollar company Microsoft doesn’t know what it doesn’t know about the opportunity.
Ethan Wolff-Mann is a senior editor at Yahoo Finance and runs the newsletter. Follow him at X @ewolffmann.
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