Nvidia's CFO Just Explained Why the AI Boom Is Eating Its Gross Margin -- and It's a Green Light for Micron
Key PointsNvidia's second-quarter earnings results were incredible, with data center sales growing 117% year over year.
Nvidia's fiscal 2027 second-quarter earnings report revealed that the company is at the epicenter of the artificial intelligence (AI) infrastructure build-out. Total revenue skyrocketed to $96.2 billion, more than doubling the $46.7 billion generated a year prior and up 18% from the prior quarter. However, the most striking figure lies within the underlying sales mix, with Nvidia's data center segment alone accounting for $89 billion in revenue.
This single segment now generates more sales than Nvidia's entire company did just one year ago, underscoring the hyperscaler capital expenditure (capex) boom is no longer a mere abstract concept. Cloud providers and AI infrastructure developers are ramping up capacity at a full pace, and Nvidia is converting this spend with extraordinary efficiency.
Despite these impressive figures, Nvidia's earnings report also contained a subtle message that may prove even more significant for the next player in the AI chip value chain: Micron Technology (NASDAQ: MU). Management provided guidance for a lower gross margin, and the explanation pointed directly at memory. This indicates that Nvidia is paying a premium for the memory stacks that accompany its GPUs, thereby channeling pricing power to memory suppliers like Micron.
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