This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
Throughout this earnings season, investors have been especially focused on Big Tech’s capital expenditures.
This spending is seen as a barometer for how bullish Microsoft, Amazon, Meta, and Alphabet are about what AI will do for them. Though, as Julie Hyman wrote Thursday, it’s a little more complicated than that, since they must go all in to even get a seat at the table.
But the nature of supply chain dynamics means that what gathers and melts in the mountains pours into the rivers and lakes.
And as our Chart of the Week shows, Big Tech is still making it rain. And Nvidia is the lake.
According to estimates from Bloomberg, coupled with quarterly reports, more than 40% of Nvidia’s revenue comes from some familiar names among the “Magnificent Seven” stocks — Microsoft, Meta, Alphabet, and Amazon.
The biggest transfer is from Microsoft, with spending from the world’s most valuable company accounting for 19% of Nvidia’s revenue. This makes the company its biggest customer by far, nearly doubling Meta’s spend and tripling that of Alphabet and Amazon.
And on the Microsoft side, Bloomberg’s data shows Nvidia accounts for 45% of its capital expenditures, whereas the chipmaker only gets 15% of Alphabet’s outlays, for example.
In the AI jungle, this data is a reminder that the chipmakers eat first, long before the hyperscalers can offer much more than hints to investors about when the AI investments will turn into AI revenue streams.
Still, this is one of the key charts that have helped power the market, especially through the tech earnings season.
For now, the lack of revenue isn’t too worrying to investors — though doubts are rising! — as it’s still hard to imagine the trillion-dollar Microsoft doesn’t know something they don’t about the opportunity.
Ethan Wolff-Mann is a Senior Editor at Yahoo Finance, running newsletters. Follow him on X @ewolffmann.
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