Nvidia Earnings Report Highlights
Nvidia reported a 106% year-over-year increase in revenue for Q2 2027, reaching $108 billion, with data center sales up 117%. Despite this growth, the company’s gross margin is projected to decrease from 75% to a low of 71%-72% in Q4 2027 before rebounding to 72%-73% in fiscal 2028. The impact of high bandwidth memory, which now constitutes 30%-40% of the cost of AI accelerators, is a significant factor in this margin dip.
Projected supply constraints mean Nvidia anticipates a top-line growth of approximately 70% for the next year, driven by high demand for AI components. CFO Colette Kress emphasized that negotiated price increases will help recover margins in fiscal 2028, suggesting the margin drop is more of a timing issue than a permanent loss of pricing power.
Furthermore, Nvidia’s partnerships with memory manufacturers Samsung, SK Hynix, and Micron aim to enhance supply capacity to meet demand. Key numbers indicate that for every 1 percentage point drop in gross margin, Nvidia’s bottom line would decrease by around $1.1 billion, marking the significance of fluctuations in component costs.
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