Deepening memory chip crunch widens gap between stock winners, losers

HONG KONG – The worsening shortage of global memory chips due to the artificial intelligence buildout is driving a widening gap in corporate results and stock performances.

Shares of memory makers Micron Technology and Samsung Electronics have surged to record highs on blockbuster results driven by buoyant product prices. Meanwhile, consumer products makers ranging from HP to Nintendo have been weighed down by profit pressures stemming from higher chip costs.

The squeeze shows how AI is reshaping the chip cycle, turning memory from a commodity input into a critical bottleneck. That has made pricing power the dividing line in global equities: suppliers are posting windfall gains, while device makers face higher costs and weaker margins.

The crisis has been evident in recent results. Memory pricing was mentioned more than 550 times in company earnings calls and quarterly reports so far in 2026 – already more than in any full year of data compiled by Bloomberg tracking global equities since 1999.

“It’s becoming increasingly obvious that the memory crunch is not only worse than feared but also becoming more prolonged than had been expected,” said Mr Michael Brown, a senior research strategist at Pepperstone Group in London.

“With AI demand continuing to surge, what we now hearing from those close to the issue is that we might see the crunch continuing in some manner potentially as far as 2030.” 

Deeper pain

Problems for memory chip buyers have been widespread. Nintendo’s stock slid on May 11 after it warned of high memory costs hitting margins on its game consoles, pushing its shares down more than 30 per cent for the year to date.

Smartphone and electric vehicle maker Xiaomi’s shares have slumped 20 per cent in 2026, while copier and camera company Canon’s shares are down 10 per cent on similar concerns.

More manufacturers are resorting to price increases to cushion margins, even at the risk of hurting demand for their products.

Nintendo last week said it will raise prices for its Switch 2, following hikes on Microsoft’s Xbox and Sony Group’s PlayStation 5 in previous months. Meta Platforms is boosting the prices of its virtual-reality headsets.

“The depth of pain tracks two factors: how much of a company’s cost base is memory, and how much leverage it has to secure supply or pass through prices,” said Ms Fabien Yip, a market analyst at IG International. She sees high risk for smartphone and gaming console businesses, and medium risk for PC makers and hyperscalers.

The story is much brighter for memory makers, who are benefiting from rising chip prices amid insatiable demand. A Bloomberg gauge of memory stocks has surged about 120 per cent so far in 2026, while a measure of consumer electronics shares is up around 3 per cent.

Samsung recently joined the elite club of companies with a market value of over US$1 trillion, after announcing a 48-fold jump in quarterly chip business profits in April. Its fellow high-bandwidth memory makers Micron and SK Hynix have also been extending stock price gains following strong reports.

Broadening benefits

The pool of beneficiaries is growing as AI moves beyond the training phase to more mainstream applications. Investors are also now snapping up shares of makers of less advanced DRAM chips as well as various flash and hard-disk drive products.

SanDisk has extended its gains for the year to more than 500 per cent after higher NAND prices drove stronger-than-expected earnings. Shares of its partner Kioxia Holdings are up more than 360 per cent on the year, ahead of its report due on May 15.

The ongoing AI rally has raised some talk of a bubble, especially amid ongoing economic uncertainty caused by the Iran war. Chip stocks tumbled in the US on May 12 as rapid recent gains spurred concerns of overheating.

Memory bulls argue that AI has spawned a “supercycle” for chip demand, well outside the industry’s traditional boom-and-bust pattern.

Contract prices for NAND chips have surged more than 600 per cent since the end of September, while those for DRAM chips are up nearly 400 per cent, and analysts see the trend continuing.

“Pricing upside should persist as AI-led demand continues to outstrip supply, inventory is tight and HBM (high bandwidth memory) supply is locked up under multi-quarter price and volume agreements,” JPMorgan Chase strategists including Mr Mixo Das wrote in a note dated May 10. They said prices and sales volumes may continue to rise in 2027-2028.