“Our gross margin is solidly at the number Kirsten report. We will not be affected by the gross margin and by more and more AI products going out.”

Why this grade

Management had asserted gross margin would hold steady and not be affected by rising AI product mix. Before that commitment came due, the CFO revised guidance to show gross margin declining to approximately 74% in Q3, explicitly attributing the drop to the growing AI revenue proportion—directly contradicting the earlier claim of no impact.

Deviation basis: reversal in kind: a claim of no margin impact from AI mix replaced by explicit guidance for margin decline due to AI mix; no fair percentage describes a directional reversal of the underlying claim

In context

“re seeing that. We're seeing that road map in all our 5 customers. Operator: One moment for our next question, and that will come from the line of Timothy Arcuri with UBS. Timothy Arcuri: I had just a question on sort of the puts and takes on gross margin as you begin to ship these racks. I mean, obviously, it's going to pull the blended margin down, but I'm wondering if there's any guardrails you can give us on this. It seems like the racks are maybe 45%, 50% gross margin. So I guess, should we think about that pulling gross margin down like 500 basis points roughly as these racks begin to ship? And I guess part of that, Hock, is there some like floor to the gross margin below which you wouldn't be willing to do more racks? Hock Tan: Hate to tell you that you must be a bit hallucinating. Our gross margin is solidly at the number Kirsten report. We will not be affected by the gross margin and by more and more AI products going out. We have gotten our yields. We've gotten our cost to the point where the model we have in AI will be fairly consistent with the models we have in the rest of the semiconductor business. Kirsten? Kirsten Spears: I would agree with that. I think on further study relative to even comments that I did make last quarter, the impact relative to our overall mix is actually not going to be substantial at all. So I wouldn't worry about it. Operator: One moment for our next question, and that will come from the line of Stacy Rasgon with Bernstein. Stacy Rasgon: I don't know if this is for Hock or Kirsten, but I wanted to dig in a little more to this substantially more than $100 billion next year. I'm trying to just count up the gigawatts. I counted, I don't know, 8 or 9, you have 3 from Anthropic, 1”