The Rundown - Deep Dive: Why AI Is Raising the Price of Everything

Episode Date: June 27, 2026

Apple just raised prices on some of their most popular products and they're all blaming the memory chip shortage caused by the AI boom. In this weekend's deep dive, Zaid breaks down how the AI data center buildout created a global memory shortage, why it's now showing up on the price tag of your next laptop, phone, and game console, and whether this is the start of a real AI-driven inflation problem. Zaid also breaks down Micron’s latest earnings and why this memory shortage and AI tax could stick around for years.

Welcome back to the rundown for another weekend deep dive. Today, we are talking about the AI price shock that's got the whole market on edge. This week, Apple raised prices on multiple items, including MacBooks, iPads, even the Vision Pro. And then just hours later, Microsoft announced that they were raising prices on the Xbox. Both Apple and Microsoft are pointing the finger at the same thing, a shortage of memory chips driven by the AI boom. So in today's episode, we're going to take a little. look at why AI is making tech products more expensive. And if this could lead to an AI-related inflationary spike and become a problem for the macro economy. We got a great one for you today.

Let's dive in. AI-related price hikes have been happening for tech products for the last few months now, but this week really caught people's attention after Apple announced some pretty drastic changes. Apple is raising prices by 15 to 25% for many of their products. The MacBook Air went up by $200. The MacBook Pro went up by $300. Even the MacBook Neo, which is their cheapest laptop, Apple specifically built to be affordable, went up by $100 and now starts at $700. And by the way, it wasn't just Mac's iPads also got hit with the price hike,

and even the Apple TV and Vision Pro will be getting more expensive. Now, Apple did leave the iPhone price alone for now, but they did hint that more price hikes were coming, probably with the iPhone 18 this fall. Now, look, a lot of people were expensive. expecting Apple to raise prices at some point. In fact, CEO Tim Cook straight up told the Wall Street Journal last week that price hikes were coming.

But I don't think many people expected the hikes to be so drastic. Now, Apple was quick to point the finger for the price hikes at the cost of memory. Tim Cooks told the Wall Street Journal that he's never seen anything like it in any area over 40 years and he compared it to a hundred year flood. Now, we'll talk about why memory prices and shortages are happening in a bit. but let's first talk about the market's reaction to the price hike. Investors did not love it. Apple stock suffered its worst day in over a year,

falling 6% on Thursday. And this also dragged down other tech and AI-related stocks across the board. You know, I think this was a big wake-up call for the market because Apple has one of the best supply chains on the planet. So if they can't navigate the memory crunch without jacking up prices drastically, the market suddenly realized that this memory problem might be much bigger than anyone initially thought.

And this could also start a chain reaction of other tech companies raising prices. In fact, just a few hours after Apple's announcement, Microsoft said they were raising the prices of the Xbox by $100 to $150. And this was actually the third price hike for the Xbox in the last 13 months. And just like Apple, Microsoft is blaming the cost of memory.

They said the cost of memory and storage in their consoles have more than doubled in price and they expected to double again by 2027. Now, on a side note, I do find it funny that Microsoft is the one complaining here because they're one of the hyperscalers spending hundreds of billions of dollars on building AI data centers,

which is leading to the supply crunch of memory. You know, it's kind of like the hot dog meme. We're all trying to find the guy who did it, Microsoft. But beyond Microsoft, Nintendo and Sony have also raised prices on their gaming consoles. Sony raised the price of the PS5 by $150 back in March,

and Nintendo plans to raise the price of the Switch 2 from $450 up to $500, starting on September 1st. So now let's talk about why we're all having to pay more for our tech gadgets and what it has to do with AI. All right, let's talk about memory. Why have memory prices gotten so expensive right now?

Well, frankly, it's because of AI. See, memory comes in basically two flavors. The first kind is the regular, boring kind of RAM that goes in your phone, your laptop, a gaming console. It's pretty much a commodity at this point, and for years, prices have gotten cheaper over time. The other kind of memory is the premium kind called HBM or high bandwidth memory. Now, this is the memory that sits next. to the AI chips that are packed inside AI data centers.

Now the key detail to understand is that both of these memories get made in the same factories. So you can already see what kind of problem this is gonna cause. Imagine if you were running a bakery, right? You could use your bakery to make cheap basic bread or you could use your bakery to make elaborate wedding cakes

and it just so happens to be the busiest wedding season of all time. And because of that, everyone is willing to pay a premium for that wedding cake. In that silly example, most people would see stop making bread and just go all in on making wedding cakes. And that's pretty much what's happening with AI and memory right now. All these memory companies are prioritizing making HBM because of the AI boom and big tech companies spending hundreds of billions of dollars on building AI data centers.

These hyperscalers like Google, Amazon, Meta, and Microsoft are all projected to spend a combined $741 billion on AI this year. So these companies are willing to spend whatever it takes to get their hands on HBM and put it in their data centers. So memory companies like Micron are doing the rational business thing by using their factories to crank out as much HBM as possible, which means that less RAM is being made. And to make matters worse,

HBM eats up roughly three times the factory space chip for chip compared to just regular RAM. So for every wafer of silicon, they shift over to AI chips. That wipes out about three wafers worth of normal memory that goes into devices like phones and laptops. Simply put, the AI companies out, there are basically vacuuming up the world's memory supply and everyone else, like the phone makers,

the laptop makers, the console makers, they're left fighting over for whatever's left. And unfortunately, it seems like the memory supply crunch won't be resolved anytime soon. The entire global memory market runs through basically three companies. There's Micron, which is based here in the US, and then you have SK Heinex and Samsung over in South Korea. Together, these three companies control about 90% of the memory market. And these three companies have been cashing in on the memory shortage. In fact, Micron just showed us exactly how big those checks have gotten. Micron reported earnings this past week and the numbers were absolutely insane.

Micron's revenues more than quadrupled in the past year, going from $9 billion in Q2 of last year to over $41 billion in the past quarter. And their profits went from $1.8 billion in the quarter last year to $28.2 billion in the previous quarter. So they literally 15 extra profits in a single year. I mean, I have never seen anything like this at this scale. And no surprise here, Micron stock has been one of the best performing in the market. It's up over 700% in the last year. And their market cap recently crossed $1 trillion for the first time ever.

So it's been an absolutely crazy year for Micron. And what became very clear from their earnings report is that Micron has raised prices significantly. Their gross margins hit 84% last quarter. that means that for every dollar of memory that Micron sells, it only costs them about 16 cents to produce that memory chip. For some contacts here, Micron's gross margins were 38% last year. So Micron is cashing in on the shortage right now, and there might not be much relief anytime soon. In the Arding's call, Micron's CEO said that tight supply conditions will last into 2027. And the thing is, Micron's not really in a rush to build more supply either, because historically,

memory has been a very boom and bus industry. When prices would go up, memory companies would then overbuild, which would flood the market with supply, and then prices would crash. This actually happened back in 2022 and 2023. The memory market crashed so hard that Micron's gross margins

went negative 9% in 2023. So Microns probably learned their lesson and they want to increase their supply gradually. But here's where things get a little spicy, all right? These big tech companies like Apple and Microsoft are not thrilled, about any of this, and they're quietly pointing the finger at the memory makers, basically blaming these companies like Micron for price couching.

Now, Micron has pointed the finger right back at these companies. A Micron executive basically blamed these big tech companies for squeezing the memory makers for rock bottom prices back in 2023 when the industry was going through a downturn. Like I just said, Micron had a negative 9% margins back then, meaning they were literally selling their memory chips for a loss. So that killed Micron and other memory makers' appetite to build more factories back then. Now, Micron is ramping up supply, but it's going to take some time.

You can't just flip a switch on this. Now, building a new memory factory takes years and costs tens of billions of dollars, and all these new factories being built today won't really come online in a meaningful way until 2028. And that's what makes this a very unique situation. This shortage we have in memory right now is baked in for years. And that brings us to the big question of whether this price hike is a contained issue for electronics and tech, or will this become an issue that balloons into a widespread inflation crisis? Well, the data does have some early answers, so let's talk about it. So, is AI going to kick off a new wave of inflation and become a macro problem for the economy? Well, according to the data, the AI spent by big tech companies is

not having a meaningful impact on inflation just yet. Now, don't get me wrong, inflation is on the rise. The PC inflation report this week showed that prices were up four point. 1% year over year in May, the highest in three years. But if you listen to our show every day, you know that that's largely because of elevated oil prices from the Iran War. And now with oil prices starting to come down, some of that inflation should cool off. But here's the thing, AI is absolutely driving up prices on some stuff

that people actually like to buy. I'm talking computers, phones, and gaming consoles. I mean, we've already seen gaming consoles get more expensive, and the research firm Gardner thinks that PC prices could climb 17% this year, and phone prices could climb 13%. Speaking of phones, Apple didn't raise the price of the iPhone 17 this week, but the iPhone 18 is right around the corner, and many people think that price will go up between $2 to $300.

And if more and more tech companies start raising prices because of the memory shortages or other AI-related supply shocks, that could hurt demand and ultimately result in less revenue. And I think that's the reality the market woke up to this week. Investors suddenly realized that there could be real next. side effects of the AI boom. So now people are starting to ask the question, what else is lurking under the surface? Which is a big reason why tech and AI stocks have sold off over the last few days. It seems like the AI euphoria that was happening back in April is starting to wear off,

which could mean that tech and AI-related stocks could be under pressure moving forward. So what's my take here? Well, look, I don't think that we should panic about AI leading to noticeably higher inflation just yet. Like, I don't think that Kevin Warsh and the Federal Reserve are having emergency meetings about memory prices right now. But here, Here's the part that gets me. For three years, we've been promised that AI was going to make everything more efficient and more productive and cheaper. In fact, Kevin Horst, the guy who's running the Fed right now literally wrote a few months ago

that AI would be a significant deflationary force. Well, so far, all that AI has done is filled the internet with slop and made Xbox and MacBooks more expensive. And look, I'm not even one of those AI haters. I actually like AI. I use the technology all the time. But I am a little upset that I have to pay more for my next next. Macbook now. You know, I thought all this

Cappex spending by these AI companies was crazy, but I didn't really care too much about it because the money was coming out of the pockets of these multi-trillion dollar tech companies. But it was this week for the first time that the AI bill got handed to consumers. And it was a reminder that all this AI spending has consequences

and ripple effects outside of the hyperscalers. So for now, we're all stuck paying the AI tax the next time we buy a laptop or an iPhone. And the way the memory shortage is looking right now, that tax is probably going to be sticking around for a couple more years. Well, all right, guys, that's it for today's weekend, deep dive. Hope you guys enjoyed that one. Let me know in the comments on which you guys think of the memory shortage.

Do you think this is all going to be a short-term temporary price hike, or are these price hikes here to stay? Also, are you holding off on buying any gadgets because of these price hikes? Drop your thoughts on Spotify and YouTube. And while you're at it, consider leaving us a five-star rating wherever you listen to your podcast. All that engagement really does help us out, and it helps other people find the show. Thank you guys again for listening. watching and commenting, shout out to Mike for all the work behind the scenes. And we'll see you guys back here tomorrow.