Nvidia's Margin Pressure Is Micron's Revenue Boost
Why did Micron and SK Hynix stock jump after Nvidia's earnings report? Because Nvidia's margin problem is their pricing power.
Overview
CFO Colette Kress spent most of Nvidia's (NASDAQ: NVDA) Q2 2027 earnings call on numbers that had gone up. Revenue rose 106% year over year. Data center sales jumped 117%. Next year's top-line growth is pegged at roughly 70%, and that is the scenario where supply runs out. In Kress's view, the market demand for artificial intelligence (AI) accelerators is rising faster than the manufacturing capacity.
Then she got to the gross margin line and walked everyone down a flight of stairs.
Details
The second quarter showed a 75% gross margin, up from 72.5% in the year-ago quarter. In Q3, it should drop to 74%. Q4 will be a trough of 71% to 72%. The rebound in fiscal 2028 looks to be in the 72%-to-73% range.
Source
Originally published at www.fool.com.