Four of the biggest names in tech — Apple's Tim Cook, Tesla and SpaceX's Elon Musk, Amazon's Andy Jassy, and Nvidia's Jensen Huang — used their latest earnings calls to flag the same problem: memory chip prices keep climbing and supply remains tight. The squeeze is already denting margins and cash flow at the companies buying memory, while Micron and Sandisk, two of the companies selling it, sit on the other side of the trade.
Four CEOs, one bottleneck
Cook told investors Apple paid more for memory in the March quarter than in December, expected to pay a lot more in the June quarter, and braced for an even higher premium in the September quarter. According to Cook, he described the memory supercycle as "a 100-year flood". Musk, during Tesla's earnings call, thanked Micron by name for a large allocation of chips, then estimated on SpaceX's call that memory production is rising about 20% a year while demand is climbing roughly 200%.
Jassy said Amazon raised its capital expenditure budget for the year from about $200 billion to $220 billion partly because of higher memory costs, and still expects a compute shortage to persist into 2027. Huang, meanwhile, said Nvidia has locked in $279 billion of supply and capacity commitments through fiscal 2032, with $267 billion of that tied to memory procurement over the next two and a half years.
Margins and cash flow take the hit
The cost is showing up in the numbers. Apple's gross margin already dropped sequentially as memory costs rose, and Nvidia is guiding investors from a gross margin in the mid-70% range down toward the low-70% range. Amazon and Tesla have both reported weaker cash conversion as they spend more upfront on chips and data centers. None of the four companies is cutting spending, however — each is paying more to keep building.
Micron and Sandisk sit on the other side
That spending is someone else's revenue. Micron is one of only three DRAM suppliers with real pricing power, with its high-bandwidth memory already sold out in advance heading into next year. Sandisk, which specializes in NAND flash, is seeing its prices pushed higher as capacity budgets shift toward storage. Both stocks currently trade at forward price-to-earnings multiples between 6 and 7.
Memory has stopped being a line-item commodity for these four companies and become the constraint their entire AI build-out runs into.
Source: Fool
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