Should You Be Worried About NVIDIA Stock?
NVIDIA (NVDA) stock trades at 26.9 times earnings, against 22.9 for the S&P 500. Buyers appear to assume profit will keep climbing alongside sales. To meet that expectation, NVIDIA has to stay about as profitable as it is now. Yet on its August 26, 2026, call, management warned of a cost rising faster than it had expected. So which cost is management worried about, and how hard will it hit?
NVIDIA Is Paying Far More For Memory
Memory is the specific cost. Management stated on the fiscal Q2 2027 call that NVIDIA faces extreme pricing conditions in the memory market. These price increases have exceeded the company’s own expectations and are headed even higher. Management also acknowledged that many participants on the call had raised concerns about gross margins as component costs rose.
Management reset its outlook accordingly. It expects gross margins to bottom in fiscal Q4 2027 in the 71% to 72% range before they settle at 72% to 73% in fiscal 2028. NVIDIA plans to counter this by raising its own prices. However, management said those increases take effect only in the first quarter of fiscal 2028. Until then, whether NVIDIA’s prices cover its memory bill remains a forecast, not a result.
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Can NVIDIA’s Sales Outgrow The Memory Bill?
So far, sales have kept climbing. The Compute & Networking segment made up 89.6% of NVIDIA’s fiscal 2026 revenue. That unit brought in $193 billion that year, up 66.5% from fiscal 2025. Management now forecasts revenue growth of about 70% in fiscal 2028. The company calls it a supply-constrained outlook, with supply expected to remain a bottleneck at least through the end of that year.
NVIDIA stock was also trading cheaper against its earnings at the end of June than it usually has. At the end of June 2026, the company’s P/E was 25.1. That figure marks the second-lowest of the 38 quarter ends since fiscal Q3 2017 that have a P/E on record. On October 16, the stock closed 10.5% below its October 6 high. The price appears to assume far less than it did for most of the past decade.
How Worried Should NVIDIA Holders Be?
Holders should be worried enough to keep watching, though this is a slow threat that management has already put numbers on. The 75.0% gross margin NVIDIA reported for fiscal Q2 2027, up from 72.4% a year earlier, comes before the low point management expects in fiscal Q4.
A holder also owns a stock that has fallen harder than the broader market during most past shocks. In the 2025 tariff shock, NVIDIA stock fell 32%, against 19% for the S&P 500.
NVIDIA’s own price increases start only in fiscal 2028. It is still open whether those increases will cover its memory costs. At the same time, sales are still growing fast, with revenue more than doubling from a year earlier in fiscal Q2 2027. NVIDIA’s gross margin for fiscal Q3 2027, in the report expected on or around November 17, 2026, is the number to watch.
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