Key Takeaways
- Nvidia’s CFO Colette Kress stated memory costs have surpassed previous forecasts and will continue climbing through next year
- The chipmaker’s supplier obligations jumped to $279 billion from $119 billion in the preceding quarter
- According to Susquehanna analysts, DRAM prices may surge over 50% this quarter while NAND flash could increase 60%
- Analyst consensus places Micron’s price target around $1,525, with KeyBanc projecting $1,750 as the top estimate
- The memory manufacturer delivered record third-quarter revenue of $41.46 billion with guidance of roughly $50 billion for the current quarter
Shares of Micron Technology (MU) finished Wednesday’s session at $938.40 before climbing an additional 3.09% in after-hours trading Thursday to approximately $967.35, following commentary from Nvidia’s quarterly earnings conference that highlighted accelerating memory costs.
During Nvidia‘s financial results discussion, CFO Colette Kress disclosed that increases in memory component pricing had “exceeded prior expectations” with additional escalation anticipated into the coming year. The graphics processor company delivered quarterly sales of $96.2 billion, representing a year-over-year doubling, although profit margins faced compression from elevated memory expenses.
CEO Jensen Huang offered no indication of curtailing memory-related expenditures. Rather, he emphasized the company’s collaboration with all three primary memory producersāMicron, Samsung, and SK Hynixāto expand production capabilities.
The total value of Nvidia’s supplier commitments has reached $279 billion, more than doubling from the prior quarter’s $119 billion. According to William Blair’s analyst Sebastien Naji, memory components represent considerably more than half of these supply arrangements.
“Memory scarcity today is being driven in large part by the AI buildout itself,” Kress explained during the investor call.
Research released Monday by Susquehanna indicated DRAM pricing could climb beyond 50% during the current quarter. NAND flash memory may experience jumps reaching 60%. Industry analyst firm Gartner forecasts global semiconductor sales will reach approximately $1.6 trillion by 2026, with memory segments alone contributing around $837.3 billion.
Analyst Community Elevates Projections
BMO Capital initiated research coverage on August 21 with an Outperform designation and $1,300 price objective. KeyBanc maintains an Overweight recommendation alongside a $1,750 target. The Street’s consensus mean currently hovers near $1,476, representing approximately 60% upside from present trading levels.
Some dissenting voices remain. TipRanks five-star investor Louis Gerard moved his rating to Hold, citing a GAAP price-to-earnings multiple of 21.99x versus SK Hynix’s 7.33x and Samsung’s 12.14x. Gerard contended that profit growth stemmed primarily from pricing power rather than unit volume expansion.
Stifel’s analyst Ruben Roy observed that Nvidia chose not to transfer the complete memory cost increase to customers across all product lines, instead absorbing some expense internally. This strategy reduces potential resistance from Nvidia or its client base.
Executive Restructuring at Micron
The memory chipmaker unveiled organizational changes on Wednesday. Manish Bhatia assumes responsibilities as president and chief operating officer, directing manufacturing operations, customer requirements, and pricing strategy. Scott DeBoer transitions to president and chief technology and products officer, guiding memory and storage innovation efforts. Sumit Sadana shifts into a senior advisory position.
CEO Sanjay Mehrotra characterized today’s memory landscape as fundamentally structural, supported by $22 billion in customer advance payments spanning 16 strategic supply partnerships.
“It’s no longer a commodity. It is a high value,” Mehrotra stated.
The company achieved record third-quarter revenue totaling $41.46 billion with current-quarter guidance of approximately $50 billion, alongside adjusted gross margin projections near 86%. Its HBM4 memory solutions are currently shipping at scale, while HBM4E development progresses toward a 2027 introduction. The upcoming earnings announcement is scheduled for September 30, with earnings per share forecasted at $31.26 compared to $3.03 in the year-ago period.
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