Counterpoint warned of the risk of prices doubling for memory for Nvidia's AI servers

Nvidia's move to use memory chips similar to those used in smartphones in servers for artificial intelligence could lead to a two-fold increase in server memory prices in just one year, research company Counterpoint Research has warned. The tech giant's decision to replace standard DDR with energy-efficient LPDDR is being called a "seismic shift" by analysts. The warning came just before Nvidia's report, the main stock exchange event of the week, which could cause record swings in the company's value.

Nvidia recently decided to reduce the power consumption of its AI servers by switching from traditional DDR server memory to LPDDR, which is commonly used in phones and tablets, Reuters writes. "Nvidia's pivot to LPDDR makes it a customer on the scale of a major smartphone maker - a seismic shift for a supply chain that can't easily digest demand of this magnitude," the agency quoted a Counterpoint report published Nov. 19.

Counterpoint now predicts that Nvidia's decision will cause server memory chip prices to double by the end of 2026. This price hike will further complicate the economics of deploying AI infrastructure, which will be a new financial blow to cloud providers and developers, Reuters reports.

Two companies - Samsung Electronics and SK Hynix - are leading the computer memory market. Samsung raised prices for memory chips for AI servers by 60% in November compared to September, Reuters reported citing sources. The rapid rise in costs could add pressure on large companies involved in building data centers. In addition, it threatens to make other products, such as smartphones and computers, in which memory chips are also used, the agency noted.

Nvidia, the AI market leader, will release its quarterly report on November 19. According to Option Research & Technology Services (ORATS), options on Nvidia stock imply a 7% move in either direction following the announcement of quarterly results. This corresponds to a swing in the market value of the world's most valuable company by a record $320 billion.

Ahead of Nvidia's report, Wall Street remains exceptionally optimistic about the main beneficiary of the AI boom. According to FactSet, 60 out of 66 analysts covering Nvidia recommend buying the company's securities (Buy and Overweight ratings), and only one expert advises selling them. The consensus is a strong buy (Buy). The average target price of $237.94 per share implies a potential upside of 31% from the closing price on November 18.

This article was AI-translated and verified by a human editor