Analyst Explains Why NVIDIA (NVDA) is Investing In Its Own Customers

We recently published 10 Trending Stocks to Watch as Brad Gerstner Explains Tailwinds for AI Trade – ’10x Manhattan Project’. NVIDIA Corp (NASDAQ:NVDA) is one of the trending stocks to watch.

James Van Geelen, the founder and portfolio manager at Citrini Research, was recently asked during a Bloomberg podcast why NVIDIA Corp (NASDAQ:NVDA) is investing in its own customers if the demand for its AI chips is real. Here is what Geelen said, focusing on the “not skeptical” view of the matter:

“I could take the very skeptical view or the kind of not skeptical view. The non-skeptical view is the best thing for Nvidia is that we accomplish AGI. So anything that it can do to get us closer to that massive, massive infrastructure that’s required for that is great for them as quickly as possible. As quickly as possible. Because every year that you don’t achieve a GI becomes less likely. So that is maybe the core factor. And then there’s, it’s good for, for them and yeah, the, the and playing into that, the, because this, this isn’t necessarily like the.com bubble because the.com bubble had fiber and then it had, you know, pets.com and, and Amazon and all that stuff. This is all pretty much CapEx Right? Tech is capital intensive again, which means that it’s, it, the bust won’t necessarily be like the.com bubble where it gives the real players time to shine. If the CapEx spending grinds to a halt because the market goes down, that’s the worst thing in the world. So in a way it’s also, it’s in their interest obviously to make sure that that doesn’t happen.”

The current AI boom cycle stems from spending by major tech companies, and Nvidia is the biggest beneficiary of this spending. In Q2 FY2026, three direct customers accounted for 23%, 19%, and 14% of NVDA’s accounts receivable. Almost all of the company’s revenue comes from AI-related infrastructure spending. In the latest quarter, $41.3 billion of the $46.7 billion revenue came from these clients. The music could stop for Nvidia if these major companies decide to slow down their spending amid a lack of ROI. If investors sense a weakness in CapEx spending, and the market begins to waver, NVDA stock price would be the first to see its impact.

Baird Chautauqua International and Global Growth Fund stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its second quarter 2025 investor letter:

“NVIDIA Corporation (NASDAQ:NVDA) reported first quarter results that were extremely solid. The company took a write-down on China-specific datacenter products and flushed out any future China contributions from their guidance, following the new export restrictions introduced in April. Demand commentary ex China was extremely encouraging—Nvidia is outgrowing expectations despite supply constraints and outgrowing competing ASIC products by a large margin. We have been underweight Nvidia relative to the benchmark, which was up 46% in the quarter, given our short-to medium-term concerns that the feverish AI datacenter build may be resulting in overcapacity, which has not come to bear.”

While we acknowledge the potential of NVDA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.