NVIDIA’s gross margins of 78%+ are almost unprecedented for a hardware company. Apple, famous for pricing power, manages only 45%.
Gross Margin Comparison
- NVIDIA: 78%
- Apple: 45%
- Microsoft: 55%
- AMD: 40%
- Intel: 35%
NVIDIA: 33 percentage points above next hardware peer (Apple)
Key Financial Metrics (Q3 2026)
- Total Revenue: $56.9B
- Data Center: $51.2B (90% of total)
- Gross Margin: 78%+
- FY2027 Backlog: $320B
Pricing Power Evidence
- H100 SXM: $30,000 list price per chip
- B200: $40,000+ premium for performance
- GB200 NVL72 Rack: $3M+ full system solution
The Value Equation
Why customers pay premium prices:
- Customer Calculation: Cost of NVIDIA premium < Cost of porting codebases + risk
- Time-to-Market Value: NVIDIA ships working solution today. Alternatives: 2-3 years away.
Why 78% Margins Are Sustainable
- No Substitute Product: CUDA ecosystem has no viable alternative at scale
- Demand >> Supply: Capacity constraints allow premium pricing
- Switching Costs Are Enormous: Rewriting codebases costs more than margin premium
- Selling an Ecosystem, Not Chips: Hardware premium reflects total value delivery
Cost per H100-Equivalent Compute
- Google TPU: $5,579
- Amazon: $7,200
- AMD: $12,500
- NVIDIA B300: $17,000
NVIDIA commands premium but delivers value
The Margin Paradox
78% margins AND customers still lining up = true pricing power
When demand exceeds supply by 3-4x (as TSMC CEO stated), pricing power is absolute. Hardware behaves like regulated infrastructure without regulation.
This is part of a comprehensive analysis. Read the full analysis on The Business Engineer.
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