Nvidia Price Increase Sparks Supply-Constrained AI Market

Nvidia's AI server systems are up about 15% against demand, but this doesn't indicate weakness in the market according to Dan Ives. He sees it as a sign that the AI infrastructure remains severely supply-constrained, with hyperscalers and enterprises still willing to absorb higher costs rather than slow spending.

The demand for chips is far outpacing supply by 15:1, Ives said in an interview with Bloomberg Television. This memory shortage is forcing companies like Nvidia to pass rising component costs through the supply chain.

Ives believes we're currently in a 'memory super cycle,' which he doesn't expect to reach equilibrium until 2028's mid-to-late period. This makes the recent price increase at Nvidia particularly significant ahead of earnings, especially given that Microsoft, Alphabet, and Oracle are among customers facing higher data-center system costs due to rising memory prices.

Despite this, Ives sees little evidence that these costs are causing customers to retreat. He expects hyperscalers to continue raising capital and increasing capital expenditures as the AI buildout accelerates.