Nvidia's Memory Woes May Spell Opportunity for Micron

Nvidia's CFO Colette Kress explained that the company's gross margin is being eroded due to rising memory prices. This is a major development, as Nvidia is at the center of the AI infrastructure build-out, and its data center segment generated $89 billion in revenue alone.

The company's total revenue reached $96.2 billion, more than double the $46.7 billion posted a year ago, and up 18% from the prior quarter. The data center segment is now producing more sales than Nvidia's entire company did one year ago.

Kress cited high-bandwidth memory (HBM) as a critical component that has become a co-equal part of the accelerator package, leading to increased procurement costs for Nvidia. This is affecting the company's gross margin, which is expected to bottom between 71% and 72% by the fourth quarter before recovering in fiscal 2028.

The impact on Micron Technology (NASDAQ: MU) could be significant, as the company is one of a few producers that can supply the stacked memory AI platforms require. With Nvidia's commitments for critical components increasing to $279 billion, higher realized average selling prices for memory vendors like Micron are likely.