- the insane frothing hype behind AI is showing me a new kind of market failure - where resources can be massively misallocated just because some small class of individuals THINK or HOPE it will result in massive returns. Even if it squeezes out every single other sector that happens to want to use SDRAM to do things OTHER than buffer memory before it's fed into a PCIE lane for a GPU.
- I'm really REALLY glad i decided to buy brand new gaming laptops for my wife and I just a couple months ago, after not having upgraded our gaming laptops for 7 and 9 years respectively. It seems like gamers are going to have this the worst - GPUs have been f'd for a long time due to crypto and AI, and now even DRAM isn't safe. Plus SSD prices are going up too. And unlike many other DRAM users where it's a business thing and they can to some degree just hike prices to cover - gamers are obviously not running businesses. It's just making the hobby more expensive.
> the insane frothing hype behind AI is showing me a new kind of market failure - where resources can be massively misallocated just because some small class of individuals THINK or HOPE it will result in massive returns.
This resonates deeply, especially to someone born in the USSR.
> the insane frothing hype behind AI is showing me a new kind of market failure - where resources can be massively misallocated just because some small class of individuals THINK or HOPE it will result in massive returns.
As someone who advocates that we only use capitalism as a tool in specific areas and try to move past it in other, I’ll defend it here to say that’s not really a market anymore when this happens.
Hyper concentration of wealth is going to lead to the same issues that command economies have where the low level capital allocations(buying shit) isn’t getting feedback from everyone involved and is just going off one asshole’s opinion
> … showing me a new kind of market failure - where resources can be massively misallocated just because some small class of individuals THINK or HOPE it will result in massive returns.
Technically speaking, this is not a market failure. [1] Why? Per the comment above, it is the individuals that are acting irrationally, right? The market is acting correctly according to its design and inputs. The market’s price adjustment is rational in response. The response is not necessarily fair to all people, but traditional styles of neoclassical economic analysis deaccentuate common notions of fairness or equality; the main goal is economic efficiency.
I prefer to ask the question: to what degree is some particular market design serving the best interest of its stakeholders and society? In democracies, we have some degree of choice over what we want!
I say all of this as a person who views markets as mechanisms not moral foundations. This distinction is made clear when studying political economic (economics for policy analysis) though I think it sometimes gets overlooked in other settings.
If one wants to explore coordination mechanisms that can handle highly irrational demand spikes, you have to think hard. To some degree, one would have to give up a key aspect of most market systems — the notion of one price set by the idea of “willingness to pay”.
[1] Market failure is a technical term within economics meaning the mechanism itself malfunctions relative to its own efficiency criteria.
It’s maybe new to you (you’re one of today’s lucky 10,000!), but this kind of market failure has been going on since at least the south sea bubble and tulip mania, if not all the way back to Roman times.
This happens when you get worse and worse inequality when it comes to buying power. The most accurate prediction into how this all plays out I think is what Gary Stevenson calls "The Squeeze Out" -> https://www.youtube.com/watch?v=pUKaB4P5Qns
Currently we are still at the stage of extraction from the upper/middle class retail investors and pension funds being sucked up by all the major tech companies that are only focused on their stock price. They have no incentive to compete, because if they do, it will ruin the game for everyone. This gets worse, and the theory (and somewhat historically) says it can lead to war.
Agree with the analysis or not, I personally think it is quite compelling to what is happening with AI, worth a watch.
Just like some of the crypto booms and busts if you time it right this could be a good thing. Buy on a refresh cycle when AWS dumps a bunch of chips and RAM used or refurbished (some places even offer warranty which is nice).
And if the market crashes or takes a big dip then temporarily eBay will flood with high end stuff at good prices.
Sucks for anyone who needs to upgrade in the next year or two though !
> the insane frothing hype behind AI is showing me a new kind of market failure
I see people using "market failure" in weird ways lately. Just because someone thinks a use for a product isn't important, doesn't mean it's a market failure. It's actually the opposite - consumers are purchasing it at a price they value it.
Someone who doesn't really need 128GB of ram won't pay the higher cost, but someone who does need it will.
The market failure results from those people having way more money than logic and economic principles dictate they should. A person would normally have to make a lot of good decisions in a row to get that much money, and would be expected continue making good decisions, but also wouldn't live long enough to reach these extreme amounts. However, repeated misallocation by the federal government over the last several decades (i.e. excessive money printing) resulted in people getting repeatedly rewarded for making the right kind of bad economic decisions instead.
There is a reason why there used to be market regulation and breaking up of monopolies. We are now-a-days trying out changes to the stable state from centuries, because that would be so yesterday, and will soon find out, why that state was chosen in the first place.
If we're going to see retailers price-gouging on DDR5, maybe people will be willing to buy slightly older gear with DDR4 (and corresponding motherboard and CPU).
Especially for systems for which the workloads are actually bound by GPU compute, network, or storage.
I've just looked up the current price of 2x8GB DDR4 I bought from CCL back in June for a basic PC for my mother. Was £34, now £75. That's nuts. Interesting to know the old stuff currently has value though.
Dram alternates between feast and famine; it's the nature of a business when the granularity of investment is so huge (you have a fab or you don't, and they cost billions -maybe trillions by now). So, it will swing back. Unfortunately it looks like maybe 3-5 years on average, from some analysis here:
https://storagesearch.com/memory-boom-bust-cycles.html
(That's just me eyeballing it, feel free to do the math)
I just gave up and built an AM4 system with a 3090 because I had 128G of ddr4 udimms on hand the whole build was for less than just the memory would have cost for an AM5/ddr5 build.
Really wish that I could replace my old skylake-x system but even ddr4 rdimms for an older xeon are crazy now let alone ddr5. Unfortunately I need slots for 3xTitan V's for the 7.450 TFLOPS each of FP64. Even the 5090 only does 1.637 TFLOPS for FP64, so just hopping that old system keeps running.
Such is life. I suggest finding a less volatile hobby, like crocheting.
Actually, the textile market is pretty volatile in the US these days with Joan's out of business. Pick a poison, I guess? There's little room for stability in a privately-owned-world.
My 64gb DDR5 kit started having stability issues running XMP a few weeks out of warranty. I bought it two years ago. Looked into replacing it and the same kit is now double the price. Bumping the voltage a bit and having better cooling gets it through memtest thankfully. The fun of building your own computer is pretty much gone for me these days.
Interesting that Samsung put their prices up 60% today, and a retailer who bought their stock at the old price feels compelled to put their prices up 2.5x.
When the AI bubble bursts we can get back to the old price
I guess I lucked out. I bought a 768GB workstation (with 9995wx CPU and rtx 6000 Pro Blackwell GPU) in August. 96GB modules were better value than 128GB. That build would be a good bit pricier today looks like.
Yeah you are not alone here being annoyed. I think we need to penalise all who drive the prices up - that includes the manufacturers but also AI companies etc...
Those price increases are not normal at all. I understand that most of it still comes from market demands but this is also skewing the market now in unfair manners. Such increases smell of criminal activity too.
That is terrible. Only less than half year! If all countries keep building AI centers, it will talk a long time for the price to be back to reasonable status.
I see it a bit differently. In marketing, companies like AppLovin with the Axon Engine and Zeta Global with Athena are already showing strong profitability, both in earnings and free cash flow. They’re also delivering noticeably higher returns on ad spend compared to pre-AI tools for their customers. This is the area I’m researching most closely, so I can only speak for marketing, but I’d love to hear from others seeing similar results in their industries.
Haven't these memory companies been caught price fixing multiple times over the years? Just how sure are we the AI bubble is the entire reason for these absurd prices?
> Just how sure are we the AI bubble is the entire reason for these absurd prices?
We're not, and market dictates that they don't have to talk to know to jack up the prices.
This ram price spike is leading Nvidia reporting for this quarter: gross margins were 70 percent. It's looking like their year over year increase in margins (double) is not because it came anywhere close to shipping double the number of units.
Meanwhile if you look at Micron their gross margin was 41% for fiscal year 2025, and 2024 looks to be 24%.
Micron and its peers, are competing with Nvidia for shareholder dollars (the CEO's real customer). Them jacking up prices is because there is enough of the market, dumb enough, to bear it right this second. And every CEO has to be looking at those numbers and thinking the same things: "Where is my cut of the pie, why aren't we at 60 percent".
We're now at a point where hardware costs are going to inhibit development. Everyone short of the biggest players are now locked out, and thats not sustainable. Of the AI ventures there is only one that seems to have a reasonable product, and possibly reasonable financials. Many of the other players are likely going to be able to weather the write downs.
Even if production capacity wasn't shared/shifting to the higher end products (which it seemingly is), there's certainly going to be an increase in demand for DDR4 as it acts as a substitute good. Prices are already up significantly.
Wild experience building a PC today and discovering the prices are less competitive with Macs than they’ve always been. Building a well-appointed gaming/production/CAD rig is suddenly very expensive between RAM, GPU, and nvme prices being so high.
We've been getting increasingly fucked for years on housing prices, healthcare, food, live entertainment, etc. Consumer electronics were one of the few areas that you could at least argue you were getting more value per dollar each year. GPU's have been a mess for awhile now but now it seems like it's just going to be everything.
Semiconductor companies have been bitten in the past by scaling up production into a bubble, so of course Samsung just raises prices. When you buy DRAM, remember that you are financing oligarchs and that Stargate has lied yet again.
So first it was bitcoin/crypto, now it's ai. pc gaming is dead at this point. i wonder if it will force developers to care about doing more with less hardware and optimize now.
Somebody do the math on when we will reliably start running out of Grid Power. Than only this "AI builout" will slow down. Manufactiring generators is boring, and very less invested than manufacturing AI servers.
At $DAYJOB, we have had confirmed and paid for orders be cancelled within the last week due to price hikes. One DDR5 server configuration went from ~$13k to near $25k USD in a matter of days.
We also were looking for DDR4 memory for some older machines and that has shot up 2x as well.
My 2022 GPU has 24GB of ram. It's like 50% more than what is similarly affordable today. It's fucked up and I'd rather slow down my spending and see the whole market go down than get scammed by hype.
This website mentions the price increase for DDR, but AI companies use Nvidia GPUs, which probably use HBM or GDDR. So I assume the respective price increase for soldered-on memory on graphics cards is even steeper.
> hbm chips are now emerging as another bottleneck in the development of those models. Both sk Hynix and Micron, an American chipmaker, have already pre-sold most of their hbm production for next year. Both are pouring billions of dollars into expanding capacity, but that will take time. Meanwhile Samsung, which manufactures 35% of the world’s hbm chips, has been plagued by production issues and reportedly plans to cut its output of the chips next year by a tenth.
80 comments
[ 4.2 ms ] story [ 81.6 ms ] thread- the insane frothing hype behind AI is showing me a new kind of market failure - where resources can be massively misallocated just because some small class of individuals THINK or HOPE it will result in massive returns. Even if it squeezes out every single other sector that happens to want to use SDRAM to do things OTHER than buffer memory before it's fed into a PCIE lane for a GPU.
- I'm really REALLY glad i decided to buy brand new gaming laptops for my wife and I just a couple months ago, after not having upgraded our gaming laptops for 7 and 9 years respectively. It seems like gamers are going to have this the worst - GPUs have been f'd for a long time due to crypto and AI, and now even DRAM isn't safe. Plus SSD prices are going up too. And unlike many other DRAM users where it's a business thing and they can to some degree just hike prices to cover - gamers are obviously not running businesses. It's just making the hobby more expensive.
This resonates deeply, especially to someone born in the USSR.
As someone who advocates that we only use capitalism as a tool in specific areas and try to move past it in other, I’ll defend it here to say that’s not really a market anymore when this happens.
Hyper concentration of wealth is going to lead to the same issues that command economies have where the low level capital allocations(buying shit) isn’t getting feedback from everyone involved and is just going off one asshole’s opinion
Technically speaking, this is not a market failure. [1] Why? Per the comment above, it is the individuals that are acting irrationally, right? The market is acting correctly according to its design and inputs. The market’s price adjustment is rational in response. The response is not necessarily fair to all people, but traditional styles of neoclassical economic analysis deaccentuate common notions of fairness or equality; the main goal is economic efficiency.
I prefer to ask the question: to what degree is some particular market design serving the best interest of its stakeholders and society? In democracies, we have some degree of choice over what we want!
I say all of this as a person who views markets as mechanisms not moral foundations. This distinction is made clear when studying political economic (economics for policy analysis) though I think it sometimes gets overlooked in other settings.
If one wants to explore coordination mechanisms that can handle highly irrational demand spikes, you have to think hard. To some degree, one would have to give up a key aspect of most market systems — the notion of one price set by the idea of “willingness to pay”.
[1] Market failure is a technical term within economics meaning the mechanism itself malfunctions relative to its own efficiency criteria.
Currently we are still at the stage of extraction from the upper/middle class retail investors and pension funds being sucked up by all the major tech companies that are only focused on their stock price. They have no incentive to compete, because if they do, it will ruin the game for everyone. This gets worse, and the theory (and somewhat historically) says it can lead to war.
Agree with the analysis or not, I personally think it is quite compelling to what is happening with AI, worth a watch.
And if the market crashes or takes a big dip then temporarily eBay will flood with high end stuff at good prices.
Sucks for anyone who needs to upgrade in the next year or two though !
I see people using "market failure" in weird ways lately. Just because someone thinks a use for a product isn't important, doesn't mean it's a market failure. It's actually the opposite - consumers are purchasing it at a price they value it.
Someone who doesn't really need 128GB of ram won't pay the higher cost, but someone who does need it will.
Especially for systems for which the workloads are actually bound by GPU compute, network, or storage.
128GB used to be 400$ in June, and now it's over $1,000 for the same 2x64GB set..
I have no idea if/when prices will come back down but it sucks.
(That's just me eyeballing it, feel free to do the math)
Really wish that I could replace my old skylake-x system but even ddr4 rdimms for an older xeon are crazy now let alone ddr5. Unfortunately I need slots for 3xTitan V's for the 7.450 TFLOPS each of FP64. Even the 5090 only does 1.637 TFLOPS for FP64, so just hopping that old system keeps running.
Close a few Chrome tabs, and save some DDR5 for the rest of us. :-)
Actually, the textile market is pretty volatile in the US these days with Joan's out of business. Pick a poison, I guess? There's little room for stability in a privately-owned-world.
Usually after the companies are fined for price-fixing
https://en.wikipedia.org/wiki/DRAM_price_fixing_scandal
When the AI bubble bursts we can get back to the old price
Those price increases are not normal at all. I understand that most of it still comes from market demands but this is also skewing the market now in unfair manners. Such increases smell of criminal activity too.
There still isn't a clear path to profitability for any of these AI products and the capital expenditure has been enormous.
We're not, and market dictates that they don't have to talk to know to jack up the prices.
This ram price spike is leading Nvidia reporting for this quarter: gross margins were 70 percent. It's looking like their year over year increase in margins (double) is not because it came anywhere close to shipping double the number of units.
Meanwhile if you look at Micron their gross margin was 41% for fiscal year 2025, and 2024 looks to be 24%.
Micron and its peers, are competing with Nvidia for shareholder dollars (the CEO's real customer). Them jacking up prices is because there is enough of the market, dumb enough, to bear it right this second. And every CEO has to be looking at those numbers and thinking the same things: "Where is my cut of the pie, why aren't we at 60 percent".
We're now at a point where hardware costs are going to inhibit development. Everyone short of the biggest players are now locked out, and thats not sustainable. Of the AI ventures there is only one that seems to have a reasonable product, and possibly reasonable financials. Many of the other players are likely going to be able to weather the write downs.
The music will stop, the question is when.
They put ads in the refrigerators. Never buy Samsung anything ever again.
That includes everyone who works in supply chain at big tech. Permanent total boycott.
https://openai.com/index/samsung-and-sk-join-stargate
The Samsung announcement contains no reference to scaling up production:
https://news.samsung.com/ca/samsung-and-openai-announce-stra...
Semiconductor companies have been bitten in the past by scaling up production into a bubble, so of course Samsung just raises prices. When you buy DRAM, remember that you are financing oligarchs and that Stargate has lied yet again.
They’ve all pretty much 5x’ed YTD. That’s completely wild.
We also were looking for DDR4 memory for some older machines and that has shot up 2x as well.
Hate this AI timeline.
> hbm chips are now emerging as another bottleneck in the development of those models. Both sk Hynix and Micron, an American chipmaker, have already pre-sold most of their hbm production for next year. Both are pouring billions of dollars into expanding capacity, but that will take time. Meanwhile Samsung, which manufactures 35% of the world’s hbm chips, has been plagued by production issues and reportedly plans to cut its output of the chips next year by a tenth.