Nvidia chief says memory shortage could outlast the AI stock sell-off

Jensen Huang says memory demand could outstrip supply until after 2029, challenging investor fears that the chip cycle is nearing its peak despite record margins across the sector.

Memory stocks have come under pressure in recent weeks as investors have grown wary of the AI trade, but Jensen Huang, the chief executive of Nvidia, has pushed back against the idea that the cycle is about to turn. Speaking at Nvidia’s GTC conference in Berlin, he said he does not expect memory supply to outstrip demand until after 2029, arguing that memory remains one of the few inputs in computing that can always be used in greater quantity. He also said Nvidia will keep working on ways to use memory more efficiently to improve performance.

The sell-off has hit the sector despite strong reported results. Micron, SK Hynix, Samsung and Sandisk have all been marked down sharply from recent highs, even as the broader shortage in memory has yet to show clear signs of easing. SK Hynix has also scrapped a planned stock market listing for its flash storage arm, a sign that market conditions have become more difficult for the group. Concerns have also risen that new products from China could eventually challenge the established suppliers.

The central question for investors is whether the current pricing power can last. Micron’s latest quarterly results showed gross margin of 86.8% and operating margin of 80.7%, levels that reflect exceptionally tight supply and powerful pricing. The company guided to a slight dip in gross margin in the next quarter, suggesting that margins may already be close to their peak. In cyclical businesses such as memory, that matters: when margins are this high, there is often little room left for further expansion.

Even so, the case for the sector has not disappeared. The article argues that memory stocks may now be cheaper than their long-term earnings power deserves, particularly if demand from physical AI applications such as robotics and autonomous vehicles continues to build. Micron, for example, trades on a forward price-to-earnings ratio of just 5, a level that implies a market already pricing in a sharp decline in profitability. If current earnings hold for several years, the valuation could prove difficult to ignore, especially if companies use excess cash for share buybacks.

For now, the debate is less about whether memory is in short supply today and more about how long that shortage can last. Investors are being asked to weigh a highly profitable present against an uncertain future. Huang’s view is that demand will remain strong for years. The sceptical view is that the industry has always moved in cycles, and that today’s exceptional margins will not last forever.