Nvidia's Supply Commitments More Than Doubled to $279 Billion. Here's What It Does to the Stock.

Nvidia (NVDA) more than doubled its supply commitments to $279 billion, locking in memory components to meet AI demand through the next several years. The bulk of the procurement focuses on memory, the critical bottleneck in AI chip production.

The commitment will squeeze gross margins to 71-72% in Q4 fiscal 2028 as the company absorbs upfront memory cost increases. Management projects a rebound to 72-73% in fiscal 2028 once price increases flow through to customers. The near-term margin compression represents a roughly 200-basis-point trough from current levels before the expected recovery.

Despite the margin pressure, Nvidia guided to 89% year-over-year revenue growth, underscoring sustained AI infrastructure spending. The company is effectively trading near-term profitability for multi-year supply security, a bet that AI chip demand will justify both the balance sheet commitment and the eventual price hikes needed to restore margins.