1303 ET - While Nvidia's decision to reset expectations for its gross margins is a negative, it shouldn't dramatically impact earnings and reflects a conscious trade-off for the company, Benchmark analyst Cody Acree writes in a note. The reset was driven by the rising cost of memory chips, Acree writes, noting that Nvidia is raising prices in the first quarter but also absorbing part of the cost inflation. "We believe the decision reflects a deliberate trade-off: preserve customer economics and deployment velocity while using scale, mix and future manufacturing learning to rebuild part of the margin," Acree writes. "The earnings impact remains manageable because revenue rises much faster than operating expense."
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