Alphabet Shares Slide as AI Memory Costs Surge and Futures Drop 1.16%
Micron's blowout earnings revealed AI-driven memory chip prices surged as supply tightened, translating into higher infrastructure costs for Big Tech including Alphabet. Nasdaq 100 futures fell 1.16% and Alphabet shares slid as investors questioned how rising AI data-center spending will impact the company's profit margins.
1. Micron's Earnings and AI Memory Price Surge
Micron guided for roughly $50 billion in quarterly revenue and about $31 in adjusted earnings per share for its fiscal fourth quarter, both well above forecasts, and posted an 84.9% gross margin. The company's forward P/E of about 9 times expected profits sits below peers Nvidia, Apple, Amazon, Microsoft and Alphabet, underscoring strong pricing power as AI demand outpaces supply.
2. Rising Infrastructure Costs for Alphabet
Alphabet has accelerated AI infrastructure investments, making its cost base sensitive to surging memory chip prices. Higher spending on data-center capacity and AI tools risks compressing Google Cloud margins and overall profitability if the company cannot pass those costs to enterprise customers or offset them with service revenue gains.
3. Market Reaction: Futures Slide and Alphabet Shares Dip
Futures tied to the Nasdaq 100 fell 1.16%, with S&P 500 and Dow E-minis down 0.53% and 0.11% respectively, as chip stock turbulence weighed on tech sentiment. Alphabet shares traded lower alongside other megacaps as investors assessed the impact of rising AI-related hardware expenses on near-term earnings.
