The decision by Nvidia Corp (NASDAQ:NVDA) to integrate smartphone-style memory chips into its AI servers could potentially double the prices of server memory by the end of 2026, according to a report.
Demand Spike Pressures Market
The move by Nvidia to use Low-Power Double Data Rate (LPDDR) memory chips, commonly found in smartphones and tablets, instead of the traditional DDR5 chips used in servers, is expected to cause a surge in demand that the industry may not be equipped to handle, according to a Counterpoint Research report on Wednesday.
“..a seismic shift for the supply chain which can't easily absorb this scale of demand," wrote Research Director MS Hwang.
This shift comes amid a global shortage of legacy memory chips, with manufacturers prioritizing advanced AI-ready components. Nvidia's sudden surge in demand for LPDDR chips could strain the already tight supply chain even further.
Counterpoint Research cautioned that the low-end shortage could move up the market as chipmakers weigh shifting more production to LPDDR to support Nvidia's demand. The firm expects this pivot could drive server-memory chip prices to double by late 2026.
“2x increase in DRAM module prices for DDR5 64GB RDIMM across Q1 2025 to the end of 2026 in a highly constrained scenario,” stated Hwang.
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AI Chip Demand Triggers Global Shortage
The global semiconductor industry has been experiencing significant disruptions due to the increasing demand for AI-related chips. In response to the AI boom, Samsung Electronics (OTC:SSNLF) hiked its key memory chip prices by up to 60% in September, triggering a global shortage. This crisis has led to a “panic ordering” situation across the industry.
Meanwhile, SK Hynix, a major supplier to Nvidia, has sold out its chip supply for 2026, driven by the AI boom, and is planning to increase investments. This surge in demand for AI-related chips has created a “super cycle” in the memory chip industry, leading to record profits for key suppliers like SK Hynix.
Recently, Billionaire Peter Thiel fully exited his Nvidia stake and sharply reduced his Tesla (NASDAQ:TSLA) holdings, reflecting what appears to be rising concern over a potential AI market bubble.
Benzinga’s Edge Rankings place Nvidia in the 98th percentile for growth and the 3rd percentile for value, reflecting a mixed performance profile. Check the detailed report here.
Nvidia is set to report its third-quarter earnings after market close on Wednesday.
Price Action: On a year-to-date basis, Nvidia stock climbed 31.13%. On Tuesday, it fell 2.81% to close at $181.36.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
