How Rare Is Nvidia’s Record Profit Margin

After paying the costs of running its business, NVIDIA (NVDA) now keeps about 65 cents of every dollar it sells. The company supplies the chips and systems that go into AI data centers. Measured over the last twelve months, this operating margin is the highest Nvidia has recorded in ten years. What would you guess that figure usually is for Nvidia?

How Unusual Is This For Nvidia?

Nvidia typically keeps about half that amount. At the end of July, its twelve-month operating margin was 65.2%, compared to a middle value of 33.0% across the last ten years.

Nvidia eclipsed a previous record of 64% set just one quarter earlier over the twelve months to April. That marks two new highs in a row. The record is recent, and the company continues to push it upward.

What Is Behind Nvidia's Record Profit Margin?

Nvidia is moving far more of what goes into AI data centers. Sales have now grown from a year earlier for 13 quarters in a row, and they more than doubled in the latest quarter. During an August 26 call, management said a surge in AI demand is behind the growth. Executives describe what it sells as a full AI factory platform. Following the close of the quarter to July, Nvidia's Vera Rubin systems began shipping in August.

In its full-year forecast for fiscal 2027, management expects operating expenses to rise by a little over 50%. Yet sales in the latest quarter more than doubled. Nvidia's net margin, representing the share of sales kept as profit, has also reached a ten-year high.

Is The Latest Quarter Still Improving?

Yes. A record measured over twelve months is slow to turn, and a single new quarter can already be telling a different story. For Nvidia, the newest quarter confirms the trend. In the quarter to July alone, the company kept 66% of its sales after running costs. This is up from 60.8% in the same quarter a year earlier.

That single quarter also lands above the 65.2% margin posted for the last twelve months. Nvidia's newest quarter is therefore outperforming its record year, and the company is still moving away from its historical normal.

When The Record Is Next Tested

Nvidia's next report is expected on or around November 17. For that report, management has already forecast a lower gross margin, which measures what Nvidia keeps after the cost of making its products. The forecast for the fiscal third quarter is 74%, plus or minus half a percentage point. The quarter to July came in at 75%. Management said memory prices had risen by more than it expected, and that it was resetting its expectations as a result.

Nvidia stock has risen 17.5% over the last twelve months. When the company releases its next report, the key figure to watch is its quarterly operating margin for the fiscal third quarter, measured against the 66% posted in the quarter to July.

Does This Mean You Should Act On NVDA?

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