Nvidia surpassed expectations with $57 billion in sales and a gross margin of 73.6%, for the ninth consecutive quarter. CEO Jensen Huang views Nvidia as an infrastructure utility turning power into profits at a 75% clip, not just a semiconductor firm.
The company’s focus on data centers and its own networking solutions and software stack gives it pricing power and protection for margins. However, inventory growth and supply commitments rose 32% and 63%, respectively, which could put pressure on Nvidia if it can’t maintain margins without lowering prices.
A seamless transfer to new GPU models like Rubin is also crucial, as bespoke chips from hyperscalers can be a concern. If Nvidia meets its gross margin target, the stock’s premium multiple may remain stable or even increase, but breaking this barrier could lead to significant price drops.
Source: https://www.thestreet.com/economy/jensen-huang-just-changed-nvidia-heres-what-you-need-to-know