Missed Nvidia in 2009? This Rare Signal Is Flashing Again.\u00a0In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia.\u00a0For the first time in years, that same “Total Conviction” signal is flashing for a company 1\/100th the size of Nvidia.\u00a0Continue \u00bb<\/a> <\/p>\n With that said, Nvidia’s print did contain a quieter signal that may matter even more for the next name in the AI chip value chain: Micron Technology (NASDAQ: MU). Nvidia’s management guided for a lower gross margin, and the explanation pointed directly at memory. This means that Nvidia is paying a premium for the stacks that sit beside its GPUs, making pricing power flow to memory suppliers like Micron. <\/p>\n Nvidia’s numbers leave little room for understatement. Gross margin came in at 75%, essentially unchanged sequentially and up by 2.6 points from a year ago. Operating income rose 19% sequentially and 124% year over year to $63.7 billion. Meanwhile, net income was $59.7 billion, or $2.46 per share. <\/p>\n Within the data center book, hyperscale customers contributed $48.7 billion of revenue — an increase of 102% year over year. It’s clear that Nvidia is far from demand constrained, a distinction that showed up in both the beat against its own outlook and the size of the upcoming guide. Guidance is the other half of the print that I am more focused on. For the third quarter, Nvidia expects to generate revenue of $108 billion, plus or minus 2%. Of note, the company is assuming no compute sales to China. <\/p>\n Perhaps the most revealing line in the company’s outlook is its gross margin<\/a>. Generally accepted accounting principles (GAAP) and non-GAAP (adjusted) gross margin are both expected to be 74%, plus or minus 50 basis points. That is a full point below the margin Nvidia just delivered. Furthermore, management explained that gross margin is expected to bottom somewhere between 71% and 72% by the fourth quarter before recovering in fiscal 2028. <\/p>\n Story Continues <\/p>\n What is eating into Nvidia’s margin? <\/p>\n Nvidia Chief Financial Officer Colette Kress was direct about the cause of the eroding margins. The step-down is clearly not a demand problem, nor is it a sudden collapse in Nvidia’s pricing power with customers. Instead, it has to do with the rising cost of memory. <\/p>\n High bandwidth memory (HBM) is no longer a commodity add-on in chip clusters. Rather, it has quickly become a co-equal component of the accelerator package. Kress told investors that Nvidia’s commitments for critical components increased from $119 billion last quarter to $279 billion, saying it was “primarily related to the procurement of memory.” <\/p>\n I see Nvidia’s margin cut as a positive signal for Micron. When a customer as large and as sophisticated as Nvidia accepts a lower gross margin outlook and cites memory prices as the culprit, it confirms the bottleneck is moving downstream into DRAM and HBM. Micron is one of a few producers that can supply the stacked memory AI platforms require. <\/p>\n Higher commitments from Nvidia are, by definition, higher realized average selling prices for memory vendors like Micron on the other side of the purchase order. Said differently, the same hyperscaler capex cycle fueling Nvidia’s growth is now filling Micron’s supply. The difference is that Micron is positioned to capture the inflation from component prices that Nvidia can no longer treat as a stable cost. <\/p>\n Nvidia’s earnings performance is a preview for Micron <\/p>\n Investors no longer need to guess whether the AI infrastructure cycle is meaningful enough to reprice memory. Nvidia’s lower margin guide just confirmed that it is. The dollars leaving Nvidia’s gross margin are not disappearing. Instead, they accrue to companies like Micron, which are shipping HBM and adjacent DRAM into Nvidia’s racks. <\/p>\n In my eyes, the prudent response is to watch Micron with the same intensity reserved for Nvidia. If the cost pressures Nvidia described are real, then Micron is positioned for the kind of print that should reset expectations and, potentially, the stock’s momentum. The bull thesis around Micron stock is no longer a “hopium trade”\u00a0attached to a historically cyclical name. Instead, it is quietly becoming an extension of Nvidia’s own trajectory. <\/p>\n Should you buy stock in Micron Technology right now? <\/p>\n Before you buy stock in\u00a0Micron Technology, consider this: <\/p>\n The Motley Fool\u00a0Stock Advisor\u00a0analyst team just identified what they believe are the\u00a010 best stocks<\/a>\u00a0for investors to buy now\u2026 and\u00a0Micron Technology\u00a0wasn’t one of them.\u00a0The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. <\/p>\n Consider when\u00a0Netflix\u00a0made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation,\u00a0you’d have $440,710!*\u00a0Or\u00a0when\u00a0Nvidia\u00a0made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation,\u00a0you’d have $1,335,252!* <\/p>\n That performance is why people listen. With a track record of\u00a0beating the S&P 500 by nearly 5x,\u00a0Stock Advisor\u00a0offers a distinct advantage. Don’t miss the latest top 10 list, available with\u00a0Stock Advisor, and join an investing community built for the long haul. <\/p>\n See the 10 stocks \u00bb<\/a> <\/p>\n *Stock Advisor returns as of August 29, 2026. <\/p>\n Adam Spatacco<\/a> has positions in Nvidia. The Motley Fool has positions in and recommends Micron Technology and Nvidia. The Motley Fool has a disclosure policy<\/a>. <\/p>\n<\/a> Image source: The Motley Fool. Nvidia’s blowout quarter underscores its scale and dominance <\/p>\n