Nvidia Says Memory Pricing Has Turned ‘Extreme’ and Is ‘Headed Even Higher Into Next Year,’ But Its Own Price Increases Are Already Executed
Nvidia's CFO Colette Kress reported 'extreme pricing conditions in memory,' expecting further increases. Nvidia's gross margin was 75% last quarter, with guidance for 71-73% in coming periods. The company attributes the shortage to AI-driven demand, affecting its costs and pricing.
How this was made
The 30-second read
Why it matters
The new guidance signals a near‑term margin dip, prompting reassessment of valuation multiples and risk premiums.
Market read
Guidance affects Nvidia's stock and the broader AI hardware supply chain, influencing both semiconductor and memory sectors.
What to watch
Potential pricing power from Nvidia's dominant AI platform and ability to pass costs to customers could mitigate margin hits.
Background
Nvidia's Q2 earnings call highlighted extreme memory pricing and its impact on margins, with CFO Colette Kress resetting guidance.
Ticker impact
Nvidia disclosed new margin guidance and memory cost impact during its Q2 earnings call, resetting expectations for FY2028.
Short-term downside risk as investors price in lower margins; long-term upside if memory supply eases.
The guidance is a primary disclosure with specific numbers, directly affecting valuation models.
Market effects
AI server memory scarcity may boost suppliers like Samsung, SK Hynix, and Micron, while compressing margins for GPU makers.
US semiconductor sector faces margin pressure; Asian memory manufacturers could see demand tailwinds.
Memory cost dynamics could influence global AI hardware supply chains and related equity valuations.
Counterpoint
If memory supply expands faster than expected, margin compression may be temporary, supporting a bullish stance on NVDA.
Key entities
- CompanyNvidia
AI chipmaker providing the primary news.
