Forget the Artificial Intelligence (AI) Capex Bubble: SpaceX CEO Elon Musk Says the Memory Shortage Will Drive Costs Even Higher

Hyperscalers are increasing their capital expenditures (capex) budgets as demand for memory chips surges.

During SpaceX's recent earnings call CEO Elon Musk specifically identified memory as the limiting factor for AI build-outs.

Musk explained that demand for memory is far outpacing available supply, implying that prices will continue rising.

Although some skeptics frame demand for memory chips and the acceleration in capital expenditures (capex) by artificial intelligence (AI) hyperscalers as a bubble, recent remarks from Elon Musk cut through this narrative with unusual clarity.

During the recent earnings call for Space Exploration Technologies , otherwise known as SpaceX, Musk said that "memory output is increasing by around 20% per year" while "demand is increasing by 200% a year, maybe higher."

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

This dynamic positions pure-play memory producers like Micron Technology (NASDAQ: MU) for outsize gains, making now a compelling entry point for investors who understand the forces of bringing next-generation AI applications into production amid the rising demand for the infrastructure that supports these developments.

Space Exploration Technologies CEO Elon Musk. Image source: The White House.