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

Nvidia Operating Margin: 2020–2026

Nvidia (NVDA) achieved a 65.0% operating margin in fiscal Q4 FY2027 (ending January 2026). For calendar year 2024, operating margin averaged 62.7% — a level that places Nvidia among the most profitable operating businesses in the world, comparable to software giants despite being a hardware company. The path there included one of the largest margin swings in semiconductor history.

Operating Margin by Year

The 57-Percentage-Point Swing

Nvidia’s operating margin went from 8.4% (Q3 2022 trough) to 65.0% (Q1 2026 peak) — a 57 percentage point improvement in just 14 quarters. This is the most dramatic operating margin expansion recorded by any large-cap technology company in modern history. The expansion was driven by three concurrent forces:

1. Revenue scale: Revenue growing 10x from trough to peak, with operating expenses growing perhaps 2x, creates enormous operating leverage
2. Pricing power: H100 ASPs of $30,000–$40,000 vs. gaming GPU ASPs of $500–$1,000 — a 50–80x price differential — with similar manufacturing cost structures
3. CUDA moat: Customers cannot easily switch to AMD or other alternatives without rewriting their software stacks, enabling sustained pricing discipline

The 2022 Compression: Why it Matters

The 2022 operating margin trough (8.4% in Q3, and 20.8% for the full year) is critically important for two reasons. First, it demonstrates that even Nvidia’s operating model is cyclical — the gaming segment is exposed to consumer spending, and when it corrected, margins compressed severely. Second, it shows that the 2023–2026 margin expansion is partly structural (AI premium pricing) and partly cyclical recovery (gaming returning to normal).

The question going forward is what the “normalized” Nvidia operating margin looks like once AI demand matures, pricing competition increases (AMD MI300X, custom silicon from Google/Amazon/Microsoft), and gaming returns to a stable base. Most analysts estimate 45–55% long-run operating margins as a sustainable range.

Comparison: Software vs. Hardware

Nvidia’s 62.7% operating margin in 2024 compares favorably to:

• Microsoft’s operating margin: ~43–45%
• Meta’s operating margin: ~40–41%
• Palantir’s operating margin: ~16–20% (GAAP)

This comparison is remarkable because Nvidia designs physical chips (even if fabless via TSMC), warehouses inventory, and manages a complex global supply chain. Software companies have no cost of goods. The fact that Nvidia outperforms software companies on operating margin at $100B+ scale is genuinely unprecedented.

Key Takeaways

• Operating margin ranged from 8.4% (2022 Q3 trough) to 65.0% (2026 Q1 peak) — a 57pp swing
• The 2022 compression was gaming-driven; the 2023–2026 expansion was AI-driven
• At 62.7% average operating margin in 2024, Nvidia outperforms most software companies
• Long-run sustainable margins are debated; consensus is ~45–55% as competition intensifies