For its fiscal third quarter, Nvidia’s gross profit margin was 74.56% and its operating margin was 63.50%. These are high numbers. Among the S&P 500, only 10% of the 457 companies for which quarterly gross margins are available showed higher gross margins for their most recently reported fiscal quarters through Tuesday.
Nvidia’s operating margin for its fiscal third quarter was 64.71%. Among the S&P 500, only 3% of companies showed higher operating margins for their most recently reported fiscal quarters.
Then again, profit margins vary by industry. They might be most meaningful when comparing very similar companies, and might be most useful for investors when looking at the general direction of one company’s margins.
A company’s gross margin is its net sales, less the cost of goods or services sold, divided by sales. Net sales are sales minus returns and discounts, such as coupons. The cost of goods or services sold includes the actual expenses when making the items or providing the services. Gross margin is a measurement of pricing power, as well as core efficiency.
A company’s operating margin incorporates more overhead and other expenses that aren’t directly related to the production of goods and services. It can be summarized as earnings before interest and taxes, divided by sales.
Here is a summary of Nvidia’s gross and operating margins over the past eight reported fiscal quarters: