Nvidia Can't Buy Enough of It. I Found 2 Ways In | BWB - Business With Brian

The Gist

Nvidia increased its multi-year supply and capacity commitments to $279 billion in a single footnote, driven primarily by memory shortages. Running a margin test across 24 semiconductor, power, and infrastructure companies reveals that memory and utility providers are capturing the markup while equipment vendors give it back.

Quick Overview

Nvidia locked up $279 billion in multi-year purchase commitments focused heavily on memory, signaling that memory and power are the ultimate supply chain constraints for AI infrastructure. The host tested 24 companies across the semiconductor supply chain using a four-quarter gross margin comparison against the prior four quarters. Thirteen companies passed the test by expanding their margins, with memory chipmakers like Micron and Sandisk alongside power provider Constellation Energy taking the top spots.

Key Points: Nvidia raised its supply and capacity commitments from $119 billion to $279 billion in a single quarter. Micron Technology increased its quarterly gross margin to 84.56 percent, more than doubling its earnings compared to the prior year. Sandisk Corporation achieved an 84.6 percent gross margin in its latest quarter despite having no prior public valuation history. Constellation Energy led the power sector with a gross margin increase of 24.5 points, proving that reliable energy sources command massive pricing power. Out of 24 companies tested across the data center supply chain, exactly 13 passed by showing year-over-year margin expansion. China-based memory chipmaker CXMT raised $8.6 billion in an IPO and is scaling wafer production to roughly 9 wafers for every 10 produced by Micron. Vertiv Holdings saw its deferred revenue double to $3.63 billion in six months, though its gross margin declined by 2.2 points.

Context: AI infrastructure buildout requires massive capital expenditure in graphics processing units, but the true bottlenecks lie further down the supply chain in high-bandwidth memory, data center power generation, and advanced cooling infrastructure.