Nvidia CFO sees supply bottleneck through fiscal 2028 on memory costs

Nvidia's supply will stay the binding constraint on growth through at least fiscal 2028, with extreme memory prices squeezing margins across the AI chip supply chain, Chief Financial Officer Colette Kress said.

Nvidia expects supply to remain the binding constraint on growth through at least fiscal 2028, with extreme memory prices squeezing margins across the AI chip supply chain, Chief Financial Officer Colette Kress said. The company is facing a worldwide shortage of high-bandwidth memory (HBM, the fast memory stacked alongside AI accelerators) that shows no sign of easing, even as demand for its data center chips keeps climbing.

"Customer forecasts point to our growth doubling next year, but our guidance reflects supply constraints," Kress said on the company's earnings call, adding that Nvidia expects fiscal 2028 revenue growth of 70 percent, well above the 44 percent analysts had modeled.

The warning lands alongside a blowout quarter. Nvidia reported fiscal second-quarter revenue of $96.22 billion, beating the $92.17 billion consensus, with adjusted earnings per share of $2.22 versus $2.10 expected. Net income more than doubled to $53.95 billion from $24.76 billion a year earlier, and the stock rose about 5 percent on the forecast. Revenue has more than doubled from $46.7 billion in the year-ago period, nearly four years after the launch of OpenAI's ChatGPT ignited the AI buildout.

The supply ceiling is the flip side of a demand surge that has made Nvidia the center of the artificial intelligence world. Its chips power the most advanced AI models, and the company increasingly provides financial backstops that let new AI data centers get funded and built. But the memory shortage is a shared industry problem: Qualcomm, in its own earnings call, cited "unprecedented memory prices" and higher manufacturing costs as it raised prices across its product line, while memory makers SK Hynix, Samsung and Micron stand to benefit from the sustained pricing power.

For investors, the bottleneck cuts both ways. It guarantees revenue visibility — Nvidia's guidance implies demand far exceeding what it can ship — but it caps near-term upside and pressures margins as the company absorbs higher input costs. The stock is up just 13 percent this year after a historic three-year rally, as competition looms from Advanced Micro Devices and Google and investors weigh whether the memory crunch will persist. Nvidia's own forecast suggests it will: supply, not demand, is the number to watch through fiscal 2028.

This article is for informational purposes only and does not constitute investment advice.