“We believe midterm there will be less pressure and even better pricing on the hyperscaler side, which I also discussed at Financial Analyst Day.”

In context

“Gina Mastantuono (President and Chief Financial Officer): Thanks, Brad. Both are good reasons for a little bit of short-term pressure on margins. Notably, even though we had a little pressure on gross margin, we held the operating margin flat. With respect to gross margin guidance, as we ramp and more goes to hyperscalers, the cost per unit comes down. We believe midterm there will be less pressure and even better pricing on the hyperscaler side, which I also discussed at Financial Analyst Day. The same thing applies with respect to AI consumption. We expect a little short-term pressure, but mid- to longer-term, we have opportunities to continue to improve. All of that being said, operating margins continue to accrete. We will remain disciplined in driving top-line growth and best-in-class margins — well on our way to the rule of 60 by 2030.”