Chipmaker Nvidia (NVDA) is making changes to its upcoming Vera Rubin systems as rising memory prices put more pressure on costs and supply. According to five-star Wedbush analyst Matt Bryson, one of the first big changes is that Nvidia has reportedly cut the memory capacity of its Small Outline Compression Attached Memory Modules in half. At the same time, memory now makes up about 29% of the system’s total cost, which is well above Nvidia’s preferred level of around 20%.
Therefore, Nvidia is also changing the configuration of its hardware. More specifically, the Vera CPU used in Nvidia’s NVL72 rack will reportedly include 96GB of memory instead of the 192GB that was originally planned. In addition, the total memory across the entire rack is expected to drop sharply, from about 55 TB to roughly 28 TB.
However, not everything is being reduced. For example, the amount of high-bandwidth HBM4 memory connected directly to the GPUs will remain the same at 20.7 TB. Basically, Nvidia is cutting back on general memory while keeping the most important AI-focused memory unchanged. This approach makes more sense when you consider the supply situation.
Supply Remains an Issue
Indeed, Bryson noted that Nvidia has already spent more than almost any other company to secure its supply chain. Even so, there still may not be enough memory available to build all the Vera Rubin systems Nvidia wants. Because of this, reducing memory per system could actually allow Nvidia to produce more total racks with the limited supply it can get.
At the same time, these supply issues are also starting to affect Nvidia’s consumer products. In fact, graphics card prices are reportedly rising by another 20% to 30% due to higher memory costs. This comes on top of earlier increases of about 10% to 15% seen in both January and May.
Bryson believes that Nvidia is choosing to pass these higher costs directly to customers rather than lowering its profit margins. As a result, consumers are paying more, even as demand for expensive electronics falls. However, strong demand for data-center chips is still helping much of the semiconductor supply chain offset the slowdown in consumer devices.
Is NVDA Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 36 Buys, one Hold, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average NVDA price target of $309.94 per share implies 60.8% upside potential. (See NVDA Stock Forecast).
