Nvidia (NVDA) Gross Margin History: Quarterly Data (2020–2026)

Nvidia Gross Margin: 2020–2026

Nvidia (NVDA) recorded a 75.0% gross margin in fiscal Q4 FY2027 (ending January 2026). For calendar year 2024, gross margin averaged 75.9% — the highest annual figure in Nvidia’s history and extraordinary for a company doing over $100 billion in annual revenue. The journey to get there included a painful trough in 2022 and two notable dips driven by one-time charges.

Nvidia Quarterly Gross Margin Highlights

The 2022 Trough: Gaming Inventory Crisis

The most dramatic feature of Nvidia’s gross margin chart is the collapse to 43.5% in Q3 2022 (calendar). This quarter saw Nvidia write down excess gaming GPU inventory sitting in retail channels and reduce pricing to clear stock. The impact was severe: gross profit fell 46% sequentially while revenue fell only 17%.

The 2022 trough is important context because it demonstrates that Nvidia’s business is not immune to cyclicality. The company’s gaming segment (historically ~40% of revenue) is exposed to consumer spending cycles. When the gaming market corrected after COVID-era demand pulled forward, Nvidia felt it acutely. The business model is strong — the 2022 episode did not indicate structural damage — but investors should understand the gaming segment’s cyclical nature.

The AI Premium: 70–78% Margins

Starting with the H100 GPU launch in 2022 and its mass adoption in 2023, Nvidia’s gross margin moved into a new structural range: 70–78%. This premium reflects:

1. Supply constraint pricing: When GPU supply is constrained relative to AI demand, Nvidia can price aggressively
2. CUDA ecosystem lock-in: The software moat reduces price sensitivity; customers pay a premium for Nvidia vs. alternatives
3. Full-stack margins: Data Center segment includes high-margin networking (InfiniBand) and software, boosting blended margins
4. Product mix: Shifting from consumer gaming to enterprise AI compute, where ASPs are $20,000–$80,000 per GPU vs. $500–$1,000 for gaming cards

The 2025 Q2 Dip: Export Restrictions

In Q2 2025 (calendar), gross margin fell sharply to 60.5% — the second-largest quarterly decline in this dataset after 2022. This was caused by U.S. export restrictions on the H20 chip (a China-market GPU), which forced Nvidia to record inventory charges and purchase obligation write-downs. Excluding these charges, the underlying gross margin would have been approximately 73–74%. The dip was one-time in nature; gross margin recovered to 72-75% in subsequent quarters.

Comparison to Peers

At 70–78% gross margins, Nvidia is firmly in the territory of high-margin software companies, not traditional hardware manufacturers. Compare to Microsoft at approximately 68–70% gross margins. For a semiconductor company doing $187 billion in annual revenue, Nvidia’s gross margin profile is genuinely unprecedented.

Key Takeaways

• Nvidia’s gross margin ranged from 43.5% (2022 Q3 trough) to 78.4% (2024 Q2 peak)
• The 2022 trough was gaming inventory-driven and temporary; structurally the business earns 63–78%
• AI GPU demand (2023 onward) pushed margins into the 70–78% range
• The 2025 Q2 dip to 60.5% was from H20 export restriction charges — one-time in nature
• At scale ($187B revenue), 70%+ gross margins are historically exceptional for hardware