Nvidia continues to set the pace in its push to dominate artificial intelligence hardware. According to estimates from Morgan Stanley, the company will take 37.3% of the world’s projected HBM memory capacity in 2027.
Nvidia is making these large memory purchases alongside other technology giants, including Alphabet with 36% and AMD with 12.1%. Combined, the three companies are expected to use more than 85% of global memory capacity, which would leave only a small share available to other companies in the industry.
Nvidia, Alphabet and AMD Could Consume Over 85% of Global Memory Capacity
To secure this leading position, Nvidia has invested the impressive sum of $279 billion, rising sharply from the $119 billion recorded in the previous quarter. According to the company itself, around $267 billion of this total is tied to binding agreements due before the end of its 2029 fiscal year, mostly aimed at securing the memory supply for its next-generation graphics accelerators.
However, this strategy of securing a large share of the supply has a direct operating cost. Despite reporting record quarterly revenue of $96.2 billion, the company confirmed that the high price of HBM will affect its profit margins. The company’s CFO, Colette Kress, expects the gross margin to fall from its current 75% to an estimated range of between 71% and 72%.
On top of this, the large-scale buying of HBM is causing a worrying domino effect in the market. Since producing one gigabyte of HBM requires up to four times more silicon wafer area than conventional RAM, production capacity for DDR5 has been greatly reduced.
This has led to price increases of almost 500% for DDR5 modules over the past year, a situation that will certainly get worse during 2027.
