Nvidia (NVDA) CFO Colette Kress told investors last week that the company is seeing “extreme pricing conditions in memory,” that the increases have “exceeded our prior expectations,” and that they are “headed even higher into next year.” Colette Kress said this in prepared remarks on Nvidia’s fiscal second-quarter earnings call on Aug. 26, and then delivered the line companies almost never say plainly: “As a result, we are resetting expectations today.”
Memory is not an exotic part. It is the DRAM in a phone, the RAM in a laptop, the storage in a game console, and one of the most expensive ingredients in a graphics card… and three companies make nearly all of it. Kress was describing the market for AI server memory, not the shelf price of a laptop, and Nvidia said nothing at all about consumer devices. But those products draw on the same suppliers and the same fabs, which is why a chip company’s margin guidance is worth reading even if you never buy a chip.
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The guidance is where the admission gets specific. Gross margin was 75% in the quarter that was just reported. Kress guided to 74% in the current quarter and told analysts that Nvidia expects “margins to bottom in Q4 in the 71% to 72% range before settling at 72% to 73% in [fiscal 2028] as executed price increases take effect in Q1.” Executed, not contemplated. Nvidia is absorbing part of the memory bill and passing part of it forward, and it has already decided how much.
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The company also volunteered the cause, which is the unusual part. “Memory scarcity today is being driven in large part by the AI buildout itself,” Kress said, and “unlike a component that simply raises our cost with no offset benefit, tighter memory supply is a symptom of the same demand surge that’s driving our own growth.” Nvidia is not presenting itself as a bystander to the shortage.
It is also the largest single buyer inside it. Nvidia’s supplier purchase commitments stood at roughly $279 billion in its most recent quarterly filing — capacity reserved years ahead of when the parts are needed. Tom’s Hardware reports that about $160 billion of that relates to memory specifically. That split is not obviously a disclosed line item in the filing, and it should be read as that outlet’s reporting rather than as a company figure.
