By Daniel Sparks, The Motley Fool
Publication Date: 2026-10-10 08:07:00
Key Points
Nvidia’s gross margin was 75.0% for its latest quarter.
Management expects gross margin to reach a low of 71% to 72% in this fiscal year’s fourth quarter.
The company’s gross margin has been at least 70% for 12 of its past 13 quarters.
I think Nvidia(NASDAQ:NVDA) stock is a buy. Its price-to-earnings ratio is around 15 using analysts’ consensus estimate for its next fiscal year (ending January 2028). For a company whose revenue more than doubled year over year last quarter, that price looks fair to me.
But it pays to know beforehand what would change that view. Nvidia is worth about $5.8 trillion, with shares trading around $239 as I write, near their all-time high. Investors paying that much are relying on Nvidia to keep charging buyers a premium for its chips.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again.In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
There’s one number Nvidia reports every quarter that I watch most closely: gross margin, or the share of revenue left after the direct cost of making what it sells. If it drops under 70% in a quarter with no one-time charge to explain it, I’d no longer call the stock a buy.
Why not revenue growth?
Revenue growth may look like the better number to watch. But it’s a weak early warning for Nvidia right now, because the company has already told…
