Nvidia's Earnings Report Sparks Shift in AI Trade Dynamics

Nvidia's latest earnings report has sent shockwaves through the market, delivering a Q2 FY2027 revenue blowout and guiding for ~70% growth in FY2028.

Despite this impressive performance, shares showed a muted reaction, reflecting mega cap-like behavior.

I maintain a Hold rating on NVDA due to unprecedented demand visibility but caution on gross margin pressure and a self-financing demand structure that clouds outer-year earnings clarity.

Gross margins are expected to compress from ~75% to 71-72% by Q4 FY2027, primarily due to higher memory costs, transferring value to memory and equipment suppliers.