The market spent last week filled with angst over the pricing tug-of-war between memory suppliers and megacap tech spenders.
The worries peaked on Thursday when Apple, XBox and Amazon all announced pricing hikes in large part due to memory chip costs
On Friday, we saw a relief rally in the megacap names on the thinking that they still control the spending and have levers to pull in terms of pricing. That appears to be continuing today with: Alphabet +1.2% Amazon +1% Meta +1.9% Microsoft +1.7% Nvidia +0.7% The chip stocks are also around flat as the market scours for signs of coming supply but there is very little in the pipeline until 2027 so it’s tough to sell something like Micron trading at 10x next quarter’s annualized earnings when they still sound determined to squeeze buyers for every dollar. We were inundated with memory and AI takes over the weekend but only one stands out.
The FT reported that Google decided to limit Meta’s Gemini AI access because Google itself is compute constrained. The report says that Google told Meta in March it couldn’t meet all its requested Gemini capacity and the limits remain in place. The report also says other Google customers have reportedly been affected by similar capacity limits.