Betting On AI Chips: Is NXP Or NVIDIA The Better Way In?
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NXP Semiconductors (NXPI) and NVIDIA (NVDA) both give you a stake in AI chips, though they operate at opposite ends of the market. While NVIDIA sells the systems that fill AI data centers, NXP supplies chips for cars and industrial devices and is introducing AI-enabled processors to its industrial line. Buyers of both are betting that demand will keep rising. That bet holds only if NXP’s car and industrial sales keep recovering and NVIDIA maintains its gross margin as memory prices rise. So what did each company last tell the market about demand?
What NXP And NVIDIA Last Told The Market
NXP told the market its recovery is holding so far. Fiscal Q2 2026 revenue rose 19.5% from a year earlier, with management saying that all end markets and regions grew. For fiscal Q3 2026, the company expects revenue of $3.75 billion, plus or minus $100 million. That represents an 18% increase from a year earlier, an outlook management called better than it had expected 90 days before.
NVIDIA offered a different kind of news. Fiscal Q2 2027 revenue rose 105.9% from a year earlier, and management guided to $108 billion, plus or minus 2%, for fiscal Q3 2027. Management expects about 70% growth in fiscal 2028 and said customers’ forecasts point higher, but NVIDIA is short of supply. So NXP is reporting that demand is coming back, while NVIDIA is reporting more demand than it can ship.
Are NXP’s And NVIDIA’s Margins Holding Up?
NVIDIA’s margin is the one moving down. Gross margin was 75.0% in fiscal Q2 2027, and management forecasts 74%, plus or minus 50 basis points, for fiscal Q3 2027. Management expects margins to bottom in the 71% to 72% range in fiscal Q4 2027, saying on the August 26, 2026 call that memory price increases had exceeded its prior expectations.
NVIDIA has room on its balance sheet, finishing fiscal Q2 2027 with $62.5 billion in cash and short-term investments against $38.4 billion of debt. Management expects to use that balance sheet to back AI labs, and projects demand from those labs to contribute roughly a quarter of its business in fiscal 2028.
NXP’s margin is moving the other way. Management expects adjusted gross margin of 58.5% in fiscal Q3 2026, up 50 basis points from the prior quarter and 150 basis points from a year earlier. It said NXP is passing higher input costs on to customers to protect it. The company owes more than it holds, carrying $11.0 billion of debt against $2.86 billion in cash and short-term investments at the end of fiscal Q2 2026.
How NXP And NVIDIA Compare Head To Head
NVIDIA leads on both growth and margin. Its revenue grew 83.4% over the four quarters to July 26, 2026, compared with 8.8% for NXP over the four quarters to June 28, 2026. NVIDIA’s operating margin over those same periods was 65.2%, against 27.3% for NXP.
Those gaps do not show which way each company is heading. NXP’s twelve-month growth includes fiscal Q3 2025, a quarter in which its sales fell, so its latest quarter’s growth runs well ahead of the twelve-month figure. If NXP’s recovery stalls, you own a company whose revenue growth averaged 0.241% across its last three twelve-month periods. If NVIDIA’s gross margin keeps sliding, you give up part of the profit lead that sets it apart.
Which Company Comes Out Ahead On These Measures?
NVIDIA comes out ahead on these measures. It grows faster, keeps more of each dollar of sales as operating profit, and holds more cash than debt. NXP is ahead on one thing: management is guiding gross margin up, while NVIDIA’s management is guiding it down.
NXP’s recovery in cars and industrial devices is holding so far. Of the two conditions behind the bet, NVIDIA’s gross margin is the shakier one, since management expects it to fall for two more quarters. NXP’s fiscal Q3 2026 report, due October 27, 2026, will show whether revenue met management’s guide. After that, NVIDIA’s gross margin in its fiscal Q3 2027 report, expected in November 2026, is the number to watch.
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