Memory Costs Rise: Can NVIDIA Protect Its 70%+ Gross Margin?

NVDA faces margin compression as memory costs climb, with gross margins forecast to slide from 75% in Q2 FY2027 to 71%-72% in Q4, according to Zacks Investment Research. The driver: surging AI infrastructure demand pushing up memory pricing across the supply chain.

Despite the headwind, NVDA is expected to hold margins above the critical 70% threshold. The company's Blackwell architecture demand, strong pricing power, and established supplier relationships provide a buffer that competitors lack. AMD and INTC are grappling with the same memory cost inflation but operate with thinner margin cushions, leaving them more exposed to the squeeze.

The setup highlights NVDA's structural advantage in the AI accelerator market. While a 300-400 basis point margin decline is meaningful, maintaining margins north of 70% at scale underscores the company's pricing discipline and product differentiation. AMD and INTC, starting from lower baselines, have less room to absorb cost shocks without hitting profitability.