Steve Eisman, one of the real-life figures behind the film "The Big Short," has pointed to a "concentration risk" at NVIDIA, noting that 70% of the company's accounts receivable comes from just five customers, based on Nvidia's recently filed Form 10-Q quarterly report.
Eisman, a former partner at Frontpoint, recently discussed his views on the artificial intelligence industry with former partner Danny Moses on a podcast. Eisman noted that although Nvidia recently reported revenue growth of 106%, the company's subsequent Form 10-Q quarterly report showed that "70% of Nvidia's accounts receivable comes from five customer accounts."
According to Nvidia's quarterly report for the period ended July 26 (Form 10-Q), five unnamed direct customers accounted for 22%, 14%, 13%, 11%, and 10% of its total accounts receivable, respectively.
To illustrate his point, Eisman told a story about a software industry analyst who once refused to push for the listing of a fast-growing company because it relied on only three customers. Eisman contrasted this with Nvidia's situation, saying, "Nvidia is one of the largest companies in the world, and 70% of its revenue comes from five customers." He concluded by reiterating, "There is extremely high concentration risk here."
Broad Reliance Across the Industry
Beyond Nvidia's own customer concentration issue, Eisman also expressed concern about the entire generative artificial intelligence industry's dependence on specific private companies. He noted, "A very large portion of the entire supply chain depends on the soundness of OpenAI and Anthropic."
Eisman added that because "we don't even have any financial data at this point," it is impossible to assess the extent of this dependence. Moses added that this reliance on artificial intelligence growth has become a "national security issue" from an economic perspective, noting that artificial intelligence has contributed significantly to GDP growth.
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