The key to Nvidia's astounding successes of the past couple ...

The key to Nvidia's astounding successes of the past couple of years has been the performance of its graphics processing units (GPUs), which are the best chips for supplying the specific type of computational horsepower necessary for generative AI, as well as other types of cloud computing needs. The necessary resources and the sheer magnitude of data involved limit the top-tier AI models to the world's largest technology companies and cloud providers -- most of which are Nvidia customers. Comments made in conjunction with those tech giants' recent quarterly results provide some insights about the state of the AI revolution -- and the evidence is clear.

For example, Microsoft (NASDAQ: MSFT) said it spent heavily to advance its AI agenda in its fiscal 2025 first quarter (which ended Sept. 30). The company had capital expenditures (capex) of $20 billion, which primarily went to support "cloud and AI-related" demand. CFO Amy Hood expects Microsoft's spending spree to continue: "We expect capital expenditures to increase on a sequential basis given our cloud and AI demand signals," she said.

During Alphabet's (NASDAQ: GOOGL) (NASDAQ: GOOG) third-quarter earnings call, CEO Sundar Pichai said, "Realizing [the opportunity] of AI requires ... meaningful capital investment." The company revealed capex of $13 billion during the quarter and suggested there would be "substantial increases in capital investment ... going into 2025."

Rounding out the big three cloud providers is Amazon (NASDAQ: AMZN). During its Q3 earnings call, CEO Andy Jassy called generative a "maybe once-in-a-lifetime type of opportunity ... we're aggressively pursuing it." CFO Brian Olsavsky put that in context, saying Amazon's capex would amount to roughly $75 billion this year, with much of that going toward cloud computing and AI infrastructure. The company also said it would unveil "100 new cloud infrastructure and AI capabilities" at AWS re:Invent later this month.

Finally, there's Meta Platforms (NASDAQ: META). While it isn't a cloud provider, the company's social media sites attract 3.29 billion people every day, giving Meta vast volumes of user data. The company increased its full-year capex outlook to roughly $39 billion, and CFO Susan Li said, "We continue to expect significant capital expenditures growth in 2025." She previously noted this was "to support our AI research and product development efforts."

The trend of accelerating capex to support the growing demand for AI is clear. Additionally, a large fraction of that money will be spent on the data centers and servers needed for cloud computing -- where the majority of generative AI software lives. As such, Nvidia will likely be the recipient of a good deal of this spending.

Nvidia has historically kept mum about its biggest customers, but that hasn't stopped Wall Street from doing some digging. Analysts with Bloomberg and Barclays Research have run the numbers and come to the conclusion that Nvidia's four biggest customers -- generating a total of 40% of its sales -- are:
Microsoft: 15%
Meta Platforms: 13%
Amazon: 6.2%
Alphabet: 5.8%

Each of these companies has left no question about their plans to spend heavily on capital expenditures, and in particular to spend heavily on infrastructure to support their cloud computing and AI aspirations. As the leading provider of data center GPUs, Nvidia will likely continue to top the list of beneficiaries of that spending.