Nvidia doesn’t just sell chips. It sells complete solutions. The price ladder runs from $40,000 B200 modules to $500,000 DGX servers to $3 million NVL72 racks. System-level margins are lower than chip margins – but system sales create deeper lock-in.
A customer using Nvidia hardware is likely using Nvidia software, trained on Nvidia platforms, optimizing with Nvidia tools.
Why Systems Beat Components
System-level margins are lower than chip-level margins. Most Blackwell revenue comes from servers and rack-scale systems, which carry lower gross margins than standalone chip sales.
But the system approach deepens customer lock-in. A customer who buys a $3 million NVL72 rack is committed to the Nvidia ecosystem for years. The lifetime value exceeds the initial margin.
Key Takeaway
As value chain analysis shows, vertical integration creates compound advantages. Nvidia is building the complete stack, not just the chip.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
