Full story
Nvidia warns of 15%+ hikes
Nvidia has told some of its largest customers that prices for servers containing its artificial intelligence chips will rise by more than 15% in many cases, with the increases tied to soaring memory chip costs.
“prices of servers containing its AI chips will rise by more than 15% in many cases”
The price hikes will go into effect on systems shipped early next year and will impact systems including those with the flagship Vera Rubin and Grace Blackwell chips, according to Bloomberg News as cited by Reuters.
Reuters reported that the increases will depend on Nvidia's chip generation and memory configurations, and that companies that build servers under contract for large data center operators such as Microsoft, Alphabet's Google, and Oracle have recently informed customers of the upcoming increases.
Reuters also said Nvidia is set to report second-quarter results on August 26, and that Nvidia did not immediately respond to a request for comments outside regular business hours.
Memory costs drive terms
Bloomberg News reported that the price increases will take effect on systems delivered early next year and will affect systems that include the flagship Vera Rubin and Grace Blackwell chips, according to sources familiar with the process.
Bloomberg Línea framed the shift as a reflection of the negotiating power memory-chip makers such as Samsung Electronics, SK Hynix, and Micron Technology have amid a boom in demand for AI infrastructure, and it said Nvidia’s accelerators form the heart of the computers that create and run AI software.
Bloomberg Línea added that the effectiveness of Nvidia’s accelerators depends on the amount of dynamic random-access memory (DRAM) they are paired with, and that the two Korean companies and Micron concentrate most of the world’s production of these chips.
The same Bloomberg Línea report said that large tech companies including Apple and Qualcomm recently said they had to raise the prices of their products due to chip shortages, while Nvidia’s gross margin was 75%.
CNBC similarly said Bloomberg News reported that Nvidia is set to increase the cost of servers containing its artificial intelligence chips, including Vera Rubin and Grace Blackwell, by more than 15% in many cases.
What changes next
Reuters described Nvidia as a proxy for the broader AI ecosystem spanning chip makers and companies financing the rapid expansion of data center capacity, as customers weigh the impact of higher server prices.
“Nvidia, whose chips underpin much of the AI infrastructure buildout”
Bloomberg Línea said large customers such as Amazon, Microsoft, Google, and Meta are developing their own internal chip programs but still rely on purchases from Nvidia to expand their data centers.
Bloomberg Línea also said their ability to move forward with greater independence will depend on access to supply from Samsung, SK Hynix, and Micron, and that the price increases are likely to add complexity to AI data center expansion plans across the sector.
In parallel, BigGo Finance reported that Nvidia's largest customers have been told server prices for systems equipped with its AI chips will rise by more than 15% in many cases, driven by soaring memory chip costs, and that the increases will take effect starting with systems shipping early next year.
BigGo Finance added that Nvidia's May earnings release showed the company generated $81.6 billion in revenue for the three months ended April 26, with gross margin holding at around 75%, and said the market's key focus is whether persistently rising memory chip costs will begin to compress Nvidia's profit margins.