The worsening shortage in global memory chips, driven by the artificial intelligence buildout, is widening the gap between corporate winners and losers in the stock market. Memory suppliers like Micron Technology Inc. and Samsung Electronics Co. have seen their shares hit record highs, while consumer product makers such as HP Inc. and Nintendo Co. face profit pressures from rising chip costs.
AI Reshapes the Memory Chip Cycle
Memory bulls argue that AI has created a "supercycle" for chip demand, breaking away from traditional boom-and-bust patterns. This has turned memory from a commodity into a critical bottleneck, giving pricing power to suppliers and squeezing margins for device makers. The divide is stark: a Bloomberg gauge of memory stocks has surged about 120% this year, while consumer electronics shares are up only around 3%.
Impact on Earnings and Stock Performance
Memory pricing has been mentioned more than 550 times in company earnings calls and reports this year, already exceeding any full year since 1999. Nintendo's stock slid after warning of high memory costs, while Xiaomi Corp. and Canon Inc. have also seen declines. To cushion margins, manufacturers like Nintendo, Microsoft, Sony, and Meta have raised prices on their devices.
According to Michael Brown, a senior research strategist at Pepperstone Group Ltd., the memory crunch may persist until 2030. "With AI demand continuing to surge, we might see the crunch continuing in some manner potentially as far as 2030," he said.
Winners and Losers
Memory makers are thriving. Samsung recently joined the trillion-dollar market cap club after a 48-fold jump in quarterly chip profits. Micron and SK Hynix have also seen strong gains. Meanwhile, companies with high memory cost exposure, like smartphone and gaming console makers, face high risk, while PC makers and hyperscalers face medium risk, according to IG International analyst Fabien Yip.
