bottleneckScore 90/100Watch
Input costs rising; NVIDIA targeting mid-seventies gross margins for FY2027 via cost optimization and mix management, not pricing power.
“Input costs are on the rise but we are working to hold gross margins in the mid-seventies... There are input prices. That are well known in the industries that we need to work through... working again on cost improvements, cycle time, and mix, that we will work to try and hold at our gross margins in the mid-seventies.”
Why it matters
NVIDIA cannot raise prices to offset input inflation; instead must rely on internal cost engineering and favorable product mix. This signals constrained pricing power despite record demand and suggests memory/component cost inflation is material and persistent into 2027.
Investment implication
HBM and advanced packaging suppliers (SK Hynix, Samsung, ASE, JCET) face margin compression from competitive supply contracts locked in at lower prices. NVIDIA's ability to defend 73–75% gross margins depends on engineering wins and volume ramps of higher-margin GB300/Rubin products; any mix shift toward lower-margin compute could trigger guidance miss.