Data Center Sales Make Up 92% of Nvidia's Revenue. Here's What Investors Need to Know About Jensen Huang's Bets on AI Growth.

Just a few years ago, Nvidia's (NASDAQ: NVDA) largest revenue source was gaming. The AI build-out changed that, as data centers have made up an increasingly larger share of its sales. In its fiscal first quarter of 2027, which ended April 26, 2026, it reported total revenue of $81.6 billion, with data center sales accounting for 92% ($75.2 billion) of that.

While Nvidia and other chipmakers reached new highs earlier this year, investors have grown concerned about a potential slowdown in AI infrastructure spending. Here's why Nvidia CEO Jensen Huang argues that there's still plenty of money to be made -- and answers whether the company's reliance on AI spending is an issue.

Image source: Nvidia Corporation.

Jensen Huang believes this is just the beginning

Semiconductor stocks have been through multiple drawdowns in recent months. In early June, AI stocks and chipmakers lost a combined $1.3 trillion in market value. Huang was in Seoul on June 8, and he framed the downturn as an opportunity to buy at a discount. He also said that we're still at the beginning of the AI build-out.

More recently, Huang spoke with Axios co-founder Mike Allen in late July, when he said that he didn't believe the semiconductor industry was due for a bust. Although the business has historically been cyclical, Huang said this time is different because the demand is infrastructure-driven rather than consumer-driven. The Nvidia CEO also believes the semiconductor industry needs to be somewhere between "five to 10 times larger than it is." Then, in a Bloomberg interview, he tightened his prediction to the high end of that range.

It makes sense for the CEO of the largest chipmaker to be bullish on chips, but this is still a very lofty forecast. The semiconductor market is projected to reach $1.51 trillion in 2026, according to the World Semiconductor Trade Statistics organization. A 10x increase would mean a value of $15.1 trillion, and achieving that in 10 years would require a compound annual growth rate (CAGR) of 26%. That kind of growth is possible for one year, or even a few years, but sustaining it for a decade would be quite the feat.

Revenue concentration is a risk factor for Nvidia

Huang has been right so far about AI spending. Nvidia's revenue is consistently growing and was up 85% year over year in its fiscal Q1 2027. Hyperscalers continue to maintain or raise their capex guidance. In a recent example, Amazon raised its full-year guidance from $200 billion to $220 billion in late July.

However, this level of spending may not last, especially if it doesn't translate into meaningful profits for AI companies. If any hyperscalers pull back, it could hit Nvidia's earnings hard, as the chipmaker's revenue is concentrated not just in data centers but in a few customers. In a recent filing, it revealed that three direct customers account for 54% of its revenue.

Nvidia still looks like one of the stronger AI investments, given its role as the leading GPU company. But its customer concentration and reliance on data center spending are risks worth keeping an eye on for investors.

Lyle Daly has positions in Nvidia. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.