By Quartz
Publication Date: 2026-04-01 07:40:00
NVIDIA Corporation NVDA is delivering unusually high profitability, with gross margins hovering around 75%. In the fourth quarter of fiscal 2026, NVDA reported a GAAP gross margin of 75% and a non-GAAP margin of 75.2%.
Both metrics marked a significant improvement on a year-over-year basis as well as sequentially, driven by strong demand for its high-end artificial intelligence (AI) chips and favorable product mix. For the first quarter of fiscal 2027, it projects GAAP gross margin and non-GAAP gross margin of 74.9% and 75%, respectively, signaling NVIDIA’s confidence in generating high profitability.
The main driver behind these elevated margins is the pricing power of its AI chips. NVIDIA’s advanced platforms like Blackwell are in tight supply, while demand from hyperscalers, enterprises and AI model developers remains strong. Its ability to deliver superior performance per watt and lower cost per token allows customers to generate higher returns, justifying premium pricing for its AI chips.
Another key driver is its integrated ecosystem. NVIDIA combines graphics processing units, networking and software like CUDA, making its solutions hard to replace. This reduces pricing pressure and supports margins.
Nonetheless, pricing power could weaken over time with the improvement in AI chip supply and an increase in competition. Large customers may also push for lower costs as their AI spending scales. New product ramps like Rubin could bring temporary cost pressures.
Overall,…
