Nvidia Corp. reported a remarkable 70% revenue growth target for fiscal 2028, significantly outpacing Wall Street’s expectations of 45%. This translates to projected revenues near $680 billion, approximately $100 billion more than estimates. The company’s recent growth rates have consistently increased, showing resilience against typical market slowdowns.
However, Nvidia’s gross margins are declining, a trend linked not to falling demand but to increased costs for securing necessary components due to supply chain shortages. This suggests profit margins are shifting down the supply chain, benefiting suppliers like Micron Technology and SanDisk, which are experiencing rising pricing power as Nvidia struggles to meet demand.
As the AI boom evolves, the next significant bottlenecks are emerging in memory and networking. Nvidia’s current initiatives in optical networking highlight the importance of these components in ensuring optimal data center performance. Investors are advised to focus on these layers of the supply chain for potential investment opportunities, as they may offer lucrative returns in the shifting profit landscape of AI technology.
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