Key facts
- Memory chip makers' total operating and net profits surpassed those of five major US tech companies last quarter.
- AI demand is driving chip supply shortages.
- Alphabet's stock dropped 13% on Thursday.
- Microsoft's AI investments are translating into revenue and profit.
- A class-action lawsuit alleges memory chipmakers artificially restricted supply and gouged prices using HBM demand as a shield.
Five leading global memory chip suppliers reported higher total operating and net profits than five major U.S. tech companies last quarter, as investment in artificial intelligence fuels chip demand that is outpacing supply. This marks a shift where chipmakers are outearning tech giants like Alphabet and Amazon, whose profits are being impacted by high data center costs and AI spending. Microsoft emerged as an outlier, reporting strong earnings and successfully pricing a $25 billion debt sale to fund its AI infrastructure buildout. Meanwhile, a class-action lawsuit alleges that memory chip manufacturers like Micron, Samsung, and SK Hynix have artificially restricted supply and inflated prices by over-allocating production to High Bandwidth Memory (HBM). This has also contributed to lower demand for PCs, impacting companies like HP and Dell.