NVDA · 10-Q · 2026Q2 · Full report

Gross Margin Drivers

NVIDIA CORP · 2026-05-20 · Importance 90 · Surprise 100 · No source text

Gross margin increased to 74.9% in the first quarter of fiscal 2027 from 60.5% a year earlier, primarily reflecting the non‑recurrence of a prior $4.5 billion charge related to H20 excess inventory and purchase obligations. Provisions for inventory and excess inventory purchase obligations were $1.1 billion in Q1 FY2027 versus $5.3 billion in Q1 FY2026, including the $4.5 billion H20 charge in the prior year. Sales of previously reserved inventory and settlements resulted in provision releases of $103 million and $436 million in Q1 FY2027 and Q1 FY2026, respectively. NVIDIA quantifies the net gross margin impacts as unfavorable by 1.2% in Q1 FY2027 and 11.0% in Q1 FY2026, highlighting inventory provisioning as a material driver of margin volatility.

Key facts

• Gross margin for the three months ended Apr 26, 2026: 74.9%, compared to 60.5% for the three months ended Apr 27, 2025. source
• Provisions for inventory and excess inventory purchase obligations: $1.1 billion for the first quarter of fiscal year 2027 and $5.3 billion for the first quarter of fiscal year 2026. source
• Net effect on gross margin from inventory provisions was an unfavorable impact of 1.2% in the first quarter of fiscal year 2027 and 11.0% in the first quarter of fiscal year 2026. source
• Sales of previously reserved inventory and settlements of excess inventory purchase obligations resulted in a provision release of $103 million for the first quarter of fiscal year 2027 and $436 million for the first quarter of fiscal year 2026. source
• Gross profit percentage of revenue for Apr 26, 2026 was 74.9% and cost of revenue was 25.1% of revenue. source

Impact estimates