NVIDIA has signaled that its gross margin is projected to decline and reach a low point in the fourth quarter of fiscal 2027, with expectations set in the 71% to 72% range, a trend partly attributed to rising memory costs. The company aims to address this development transparently rather than leaving it as an unresolved concern for investors.

This guidance follows a blockbuster second-quarter performance where NVIDIA reported revenue of $96.2 billion, marking a 106% year-over-year surge, alongside data center revenue of $89 billion, which climbed 117% compared to the same period last year.

According to the company's remarks, the current memory shortage is largely fueled by the expansion of AI infrastructure itself, which has intensified demand for high-bandwidth memory components. The firm's leadership, including executive Kress, emphasized the importance of clear communication on this matter, stating, "We want to be upfront about this rather than letting it linger as an open question."

The anticipated margin compression reflects broader supply chain pressures within the AI hardware ecosystem, as memory pricing dynamics continue to influence profitability metrics for leading semiconductor players.