Nvidia expects gross margin of approximately 74.0 percent, plus or minus 50 basis points, for the third fiscal quarter of 2027, according to SEC filings. This misses consensus expectations of 74.9 percent and some buy-side projections as high as 76.5 percent—a sequential contraction from Q2's 75 percent.
The company attributes the compression to manufacturing and scaling costs tied to next-generation product ramps, combined with higher memory and component prices. More concerning for investors: management projects gross margins will fall further to 71 to 72 percent in Q4 FY2027 before recovering in fiscal 2028.
Nvidia guided Q3 revenue to $108.0 billion, plus or minus 2 percent.
The magnitude of the expected trough matters for valuation. A 71 to 72 percent Q4 margin—a 300 to 400 basis point drop from today's levels—is material. Investors should watch whether this reflects temporary scaling friction (a buying opportunity on recovery) or signals structural margin pressure that extends beyond the transition cycle.
