NVDA posted an 8k on the SEC Edgar website that contains the press release the company issued summarizing its latest quarterly results. To my mind, the key figures are on the first page under the title Q2 Fiscal 2025 Summary. They’re in the last two columns on the Gross margin line.

Y/Y the company’s gross margin (basically what it pays TSMC to make its chips as a percentage of their sales price to customers) at 75.1% is up by 5.0 percentage points. Q/Q it’s down by 3.3 percentage points.

My guess is that this is more a confirmation of the company’s competitive situation–with 75% as the upper bound for the gross margin–than startling new information. If we assume that current analyst estimates (which I’m seeing on the Fidelity website) are reasonably accurate–and they should be more so than in the recent past because margin expansion is off the table as a variable–eps over the coming year should be $3.50-$4.00 a share. This would imply NVDA is trading at a forward PE, given a current price of $118, of about 30x.

To my mind, that’s a reasonable number. It’s not a bargain basement valuation, but given the company’s record of innovation over a long period of time it shouldn’t be. The two big issues I see for the coming year are: the timing of the wide availability of the next iteration of the company’s AI chips and–more crucial, I think–if/when big customers will be able to substitute in house developed semiconductors for lower-end NVDA offerings.