AI Capex Boom Keeps Memory Chips Expensive; NVDA, SMCI Defy Valuation Logic With Record Pricing

The artificial intelligence infrastructure build-out is defying traditional valuation discipline and sustaining memory chip rallies at levels that would normally trigger profit-taking. Bloomberg analysts note that some of the semiconductor industry's top stocks have become cheaper to own in traditional metrics (lower forward P/E ratios) even as their share prices reach nosebleed levels, a paradox explained by persistently high earnings growth driven by AI capex. NVIDIA alone has reached a $5.5 trillion market cap, with CEO Jensen Huang spotted walking Beijing's streets during the Trump-Xi summit, symbolizing the company's outsized influence over tech narratives.

Meta has just signed a $21 billion agreement with CoreWeave for long-term AI inference capacity, a structural shift beyond just model training. This multi-year capex commitment from one of the world's largest tech players is anchoring expectations that AI infrastructure demand will persist well into 2027 and beyond. Memory chip availability is becoming a bottleneck; Goldman Sachs research notes that Broadcom chips may present a constraint in some AI deployments, while AMD supply in switches is expected to scale meaningfully over the next 2-3 years. These supply dynamics are supporting pricing power and valuation premiums for incumbents like NVDA and SMCI.

The narrative also touches on geopolitical tailwinds: reports that the US approved Chinese companies to buy Nvidia chips (later disputed) briefly sent NVDA "parabolic" in social chatter, highlighting how trade policy uncertainty and China openings still move the tape. Investors are crowded into these names, and consensus is now betting on sustained AI infrastructure spending through at least 2027, with little room for disappointment.

The key risk is capex satiation: if major cloud providers announce capacity sufficiency or if spending growth slows materially, memory stocks could see a sharp repricing. Additionally, any further tightening of China export restrictions would pressure NVDA's revenue guidanceCompany-issued forecasts of future financial performance. and shake confidence in the durability of the rally.