Nvidia's CFO Just Explained Why the AI Boom Is Eating Its Gross Margin -- and It's a Green Light for Micron
Nvidia guided for a lower gross margin over the next two quarters.
Overview
Nvidia's (NASDAQ: NVDA) fiscal 2027 second-quarter earnings report was less of a quarterly update than it was a reminder that the company sits at the center of the artificial intelligence (AI) infrastructure build-out. Total revenue reached $96.2 billion, more than double the $46.7 billion posted a year ago and up 18% from the prior quarter. The more striking comparison, however, sits inside the underlying mix of Nvidia's sales.
The company's data center segment generated $89 billion alone. This single franchise now produces more sales than Nvidia's entire company did one year ago. These figures are proving that the hyperscaler capital expenditure (capex) boom is no longer an abstract backdrop. Cloud providers and AI infrastructure developers are adding capacity at full speed, and Nvidia is converting on that spend with unprecedented efficiency.
Details
With that said, Nvidia's print did contain a quieter signal that may matter even more for the next name in the AI chip value chain: Micron Technology (NASDAQ: MU). Nvidia's management guided for a lower gross margin, and the explanation pointed directly at memory. This means that Nvidia is paying a premium for the stacks that sit beside its GPUs, making pricing power flow to memory suppliers like Micron.
Source
Originally published at www.fool.com.