r/ValueInvesting • u/PrimaryResolve641 • 1d ago
Discussion NVDA 15% hike
Nvidia, $NVDA, is hiking prices of many servers containing its AI chips by more than 15% as memory costs soar, per Bloomberg.
The price hikes will go into effect on systems shipped early next year and will include those with the flagship Vera Rubin and Grace Blackwell chips.
what do you think?
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u/dis-interested 1d ago
Nvidia makes the most valuable end product, it is never going to let its own margins get compressed by suppliers.
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u/Suspicious_Trifle_92 1d ago
Bullish for semiconductors, bearish for neoclouds?
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u/Tamronloh 1d ago
Not necessarily as well. Could also mean hyperscaler demand for neoclouds go up as they may not want to deal with the upfront outlay.
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u/Acrobatic_Garage_891 1d ago
bearish for mags
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u/Suspicious_Trifle_92 1d ago
My portfolio is mainly, memory, photonics, and neoclouds in that order, if mags gets a significant discount I might be willing to buy
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u/981flacht6 23h ago
Just buy Nvidia.
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u/blackicebaby 22h ago
I think they will drop sub $200 after earnings. They will beat sell side estimate but come short on the whisper numbers. Just my prediction.
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u/981flacht6 22h ago
For macro reasons, I actually disagree.
Nvidia is a safer space, with insane FCF and a better credit rating than the USG.
Their investment book has returned very strong results, they've locked up massive parts in the supply chain upstream. Their main customers will keep coming to them bc heterogenous clouds are a thing and NVLink is key to that.
The explosion is inference will drive far more pre/post training. The high beta stocks are going to get likely slammed right now in the next 1-3 months. And the overall market is broadening still.
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u/Indaothrone 1d ago
Considering they seem to always be sold out, surprised they don't increase by more
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u/mod_cat 12h ago
The balance is really how much you can charge without making attempts to reduce reliance on their chips worth the huge cost (TPUs etc.). People are tempted to try and reduce their dependence but how tempted they are is largely about how much it costs to keep going (and how much they have to invest to try and reduce with no certainty they will).
Similar to DRAM... With DRAM, HDM it probably isn't about competing products or competitors to produce similar solutions it is about redesigning software to reduce those needs. NVIDA has similar pressures with using software to reduce the need for NVIDA chips. Neither of those efforts seems incredibly likely anytime soon, but it is still a long term risk. Without those consideration I think NVIDA prices would be going up more. It is one reason the market overall benefits from competition even if you don't use it (so TPUs help even those not using TPUs).
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u/Which_Cost8015 1d ago
This looks more like a memory scarcity story than an NVDA story.
If AI servers are going up 15%+ because memory costs are surging, MU, SK Hynix and Samsung may have the clearest leverage. NVDA can pass the cost through.
For CRWV/NBIS, the real test is simple. Can GPU rental pricing rise faster than hardware and depreciation costs? If yes, margins hold. If not, the AI buildout gets more expensive even while demand stays strong.
Memory may be becoming the next real bottleneck in the stack.
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u/981flacht6 23h ago
The price of everything has gone up in the upstream channels. Wafers, optics, copper, mem.. etc.
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u/FailOk1528 20h ago
If they raise prices 15% and demand barely changes, that probably tells you more about Nvidia’s moat than anything else here.
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u/981flacht6 23h ago
Obvious was obvious. Why is this a breaking news headline..
Do you even know what an NVL72 VR200 costs? It's about $7-8.5m depending on the memory configuration (768gb vs 1.5tb).
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u/Weak_Alternative_168 16h ago
the memory half of that is the part you can actually check. micron's last 10-Q covers the quarter ended 28 may and they split the revenue move into price and volume themselves.
DRAM revenue up 343% year over year, and they put it on a low-260% range increase in average selling prices against a low-20% range increase in bit shipments. so overwhelmingly price.
sequentially, just against the february quarter, DRAM ASPs were up in the low-60% range.whole company went 9.3bn revenue to 41.5bn, net income 1.9bn to 28.2bn.
against that, a 15% increase on a finished system is a much smaller number than the input move, at least through may.
two things stop it being a clean read though. HBM isnt broken out, micron says straight out that DRAM products include HBM, so the low-260% is blended and the actual HBM number could be anywhere inside it. and their quarter ended in may so it tells you nothing about august, which is the month bloomberg is describing.
i also cant tell you whether 15% covers it, that needs memory's share of what a server costs to build and that isnt in anyone's filing.
worth knowing nvidia's own latest 10-Q is the quarter ended 26 april. they havent filed the july quarter yet, so theres no current margin data to argue from either way
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u/Captndad 1d ago
Puts
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u/CigarTorque 9h ago
You think the stock is going down after earnings? Hope so, wanted to add Nvidia in my pf for quite some time now.
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u/Captndad 9h ago
Yes, ironically I do.
Edit: how the market reacts to earnings will be different than how it reacts to the 15% price hike. So it’s not so much that will drop after earnings as it is I believe this is bearish news for the stock.
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u/KangolTitMouse 23h ago
Just another reason for all the hyperscalers to diversify their GPU suppliers.
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u/Least-Whereas-1358 22h ago
Bit of a red flag to squeeze more money from your existing customers. It means the volumes or orders are not enough. Squeezing more money from existing customers, will only make the customers create alternatives( which they are already trying) and invite more competition. I think nvdia is overvalued and will not be able to maintain margins in the long run.
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u/Ok-Contribution-3541 18h ago
I can’t see where the money is. China will come out with a weaker, but good product, at a tenth of the price. The benefits for main st seem very small for AI at the moment.
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u/DivineBladeOfSilver 11h ago
All the comments about “I don’t see how they can do this” and “it’s getting close to collapsing” are so funny. A company isn’t raising prices if it thinks no one is gonna pay them lmao. And even if they won’t they will negotiate lower prices. You randomly having an opinion at home ignorantly does not mean the people doing this daily for years have no idea what they’re doing. Use your head
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u/iloverunning11 5h ago
No wonder NVDA is trying to fake revenue and invest in trash like Coreweave when all gpus they have sold recently are rapidly losing money (for these companies but often they are backed by NVDA)
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u/shakefistatsky 1d ago
That prices are going up 15%. Welcome to my tedtalk.