Memory chip stocks surged 6% following the U.S.-Iran peace agreement, with the Roundhill Memory ETF (DRAM) advancing 6% and major producers posting significant gains. Micron stock rallied 8% in premarket trading, breaking above the $1,000 mark at $1,056 after soaring 250% year to date. SK Hynix shares gained 6.4% while Samsung stock rose 4.5% in Seoul, with Seagate, SanDisk, and Western Digital stocks each gaining 5.6%. The rally comes as U.S. President Donald Trump and Iranian officials announced a peace agreement expected to end months of conflict and reopen the strategically important Strait of Hormuz. According to CNBC, Trump announced on his Truth Social account that "The Deal with the Islamic Republic of Iran is now complete" and "I hereby fully authorize the toll-free opening of the Strait of Hormuz".
Nvidia has warned major customers that Grace Blackwell and Vera Rubin server costs could rise more than 15% in early 2027 as memory prices climb, according to 24/7 Wall St. reports. This significant price increase affects some of Nvidia's largest customers, including Alphabet, which operates data centers using both Nvidia hardware and its own tensor processing units (TPUs). The warning positions Alphabet's TPU business with a stronger sales pitch while adding momentum to Marvell's custom-chip pipeline, creating beneficiaries regardless of which chip architecture ultimately wins market dominance.
Memory chip costs have experienced a dramatic increase, rising from 10-15% of device prices two years ago to nearly 50% of total device cost currently, according to Asus India Vice-President Arnold Su. As reported by Business Standard, this represents a four-fold increase in memory chip costs as a percentage of device prices over the past two years. The surge has now extended to 70% of AI infrastructure costs, according to latest global investment data, highlighting the critical role memory chips play in artificial intelligence applications. Recent price increases have intensified further with memory chip costs increasing by 5-10% in the October-December quarter, as reported by Asus India. According to TrendForce's latest memory industry research, DRAM and NAND flash will account for 68% of major cloud service providers' CapEx in 2027, demonstrating the continued dominance of memory costs in AI infrastructure investments. UBS analyst Timothy Arcuri noted that inflation in memory-chip prices has been a major driver of hyperscaler capital expenditure increases in recent quarters.
Nvidia announced partnerships with major financial firms including Apollo Global Management, Blackstone, and Goldman Sachs to deploy more than $500 billion in third-party capital toward AI data-center build-out, as reported by MarketWatch. The company also announced a partnership with SB Energy to deploy its AI infrastructure. UBS analyst Timothy Arcuri noted that these infrastructure agreements help address worries about the durability of AI demand because they ensure infrastructure funding, supporting "both the financeability of AI compute and the strength of [Nvidia's] ecosystem." Any updates Nvidia provides about its business in China could be important given reports that some customers in the country have received initial deliveries of approved H200 chips, with MarketWatch citing the Financial Times and noting these shipments "represent a material upside lever" to Nvidia's guidance for the October quarter.
Nvidia is expected to report revenue of $92.3 billion for the July quarter, according to FactSet estimates, with analysts looking for its data-center segment revenue to grow 110% from a year ago to $86.3 billion. The FactSet consensus calls for adjusted earnings of $2.09 per share. For the October quarter, analysts are eyeing adjusted earnings of $2.37 per share, and overall revenue of $104.2 billion. UBS analyst Timothy Arcuri could see Nvidia's October-quarter revenue reaching more than $110 billion as its Blackwell shipments are "holding stable" and the upcoming Rubin platform is entering the mix. Rubin should be a more substantial revenue step-up in the fourth quarter as shipments accelerate, he said.
