More Than a Quarter of Nvidia's Revenue Now Comes From Customers Based in Taiwan. Should Investors Be Worried?

When investors think about who buys Nvidia's (NASDAQ:NVDA) chips, the names that come to mind tend to be American: the giant cloud platforms and the labs building artificial intelligence (AI) models. The company's latest quarterly filing offers a different answer.

During the fiscal second quarter of 2027 (the period ended July 26), $27.0 billion of Nvidia's revenue was billed to customers headquartered in Taiwan. That's 28% of the quarter's $96.2 billion total.

The line is climbing fast, too. A year earlier, it was $8.9 billion, or about 19% of revenue. Three months before the latest quarter, it was about $12 billion, or roughly 15%. So the dollar figure tripled in a year and more than doubled in a quarter -- far faster than the business as a whole grew.

An investor could see that and worry the growth story has quietly moved somewhere unexpected. The stock sits near $212 as of this writing, down about 10% from its 52-week high.

But I think the disclosure is more useful than alarming. It shows who Nvidia bills -- and why that group isn't the same thing as demand.

Image source: Nvidia.

A $27 billion line item

Nvidia sorts revenue by geography using the headquarters location of the direct customers it bills. On that basis, the United States led the fiscal second quarter at $60.1 billion, or about 62% of revenue. Taiwan came second at $27.0 billion. China, including Hong Kong, contributed $7.9 billion, and the rest of the world combined for just $1.3 billion. Altogether, customers headquartered outside the U.S. accounted for 38% of the quarter's revenue, against 30% a year earlier.

The quarter those numbers sit inside was itself enormous. Companywide revenue totaled $96.2 billion, up 106% year over year, and about 92% of it came from the data center business.

In other words, Taiwan wasn't just growing with the company. It was gaining share of a total that itself doubled.

Who is actually buying?

Nvidia's direct customers (the buyers it invoices) include distributors, companies that build graphics cards and servers, cloud service providers, AI model makers, and system integrators. And the company notes that the end customer and the shipping location may be different from the direct customer's headquarters.

Taiwan happens to be the home base of much of the industry that turns Nvidia's chips into finished AI servers. Nvidia's own annual filing names Taiwan-based Hon Hai Precision Industry, better known as Foxconn, among the contract manufacturers that assemble, test, and package its final products.

Much of the revenue billed to Taiwan, then, is likely hardware passing through intermediaries on its way to data centers somewhere else.

In other words, the Taiwan line doesn't say Taiwanese demand for AI chips tripled. It more likely says that as Nvidia's newest products (full server racks, not just chips) ramped up, more orders routed through the island's system builders before reaching the cloud providers, AI model makers, and other end users Nvidia calls its indirect customers.

Concentration is the real disclosure

Read the table that way, and it becomes a measure of how much of Nvidia's revenue lands with just a few direct customers. One direct customer accounted for 16% of Nvidia's total revenue in the quarter -- about $15 billion billed to a single buyer.

That shape isn't new, either. In the same quarter a year earlier, two direct customers represented 23% and 16% of revenue. Of course, the names behind the percentages can shift as orders route differently. But a few enormous buyers of record have carried the company for a while.

Further, the same island shows up on the other side of the business. Nvidia's annual filing names Taiwan Semiconductor Manufacturing among the foundries that produce its semiconductor wafers.

So Taiwan sits on both sides of Nvidia's business. Much of the manufacturing happens there, and more than a quarter of revenue is billed there. Any disruption to the island's role (geopolitical or otherwise) would touch both sides at once.

Demand itself is better judged elsewhere. Management's forecast for the fiscal third quarter, now underway, is $108.0 billion of revenue -- and growth like that is ultimately a claim about what customers keep spending.

The geography table can't tell you whether they will. Paired with the concentration disclosure, it tells you how few names of substantial size are on the invoices. That concentration, I'd argue, is the finding worth taking from the filing.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.