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Remember two weeks ago when Apple passed Nvidia in market capitalization? That’s now ancient history. At today’s close, Nvidia’s market capitalization was $1 trillion higher than Apple’s. In the past two weeks, Nvidia stock has risen 18% and Apple’s has fallen 10% or so. That seems to be mostly due to broad market dynamics, such as the state of the Iran war, but the fact that insatiable demand for Nvidia’s AI chips has sent chip rental prices through the roof may also have something to do with it.
We got a reminder about the frothiness of demand for AI capacity right now from executives at two small Nvidia-backed cloud firms, CoreWeave and Nebius, speaking on earnings calls in the past two days. Nebius CEO Arkady Volozh revealed today that Nebius had held its first auction of computing capacity during the second quarter, with prices for Nvidia’s Blackwell generation of chips “15% above the highest price we ever charged before.” Volozh also said Nebius was selling more capacity closer to the time customers needed it to take advantage of high prices.
We heard a similar story from CoreWeave, whose CEO, Michael Intrator, told analysts on Tuesday evening that “pricing and margins for our Blackwell and [later-generation] Vera Rubin” chips were “setting new highs, while pricing for prior-generation [chips] is at or above where it was years ago.” CoreWeave raised prices 25% in July “in response to the current demand environment,” said CoreWeave finance chief Nitin Agrawal. CoreWeave is also looking to do short-term deals to take advantage of higher prices.
CoreWeave executives called out this pricing dynamic as bullish for the company’s business model. “We are more confident than ever in the long-term ROI [return on investment] of our product,” Agrawal said. Wall Street agreed. CoreWeave rose 19% on Wednesday, while Nebius stock soared 34%. Both companies are bleeding money in their data center expansion, but investors don’t care right now. As MoffettNathanson analyst Nick Del Deo said in a report on Tuesday, “pricing has captured the market’s attention of late.”
The pricing phenomenon may also account for some of SpaceX’s recent recovery—its stock rose 9.7% on Wednesday to $146.15, 35% above where it was last week. SpaceX led the way on short-term high-priced deals when it rented capacity to Anthropic and Google in the past few months. BNP Paribas noted on Wednesday that the pricing Nebius got on short-term deals lately were “roughly equivalent to the economics of SpaceX’s recently signed deals.”
Despite Wall Street’s applause, it’s easy to overinterpret the significance of high prices for compute capacity. All that’s happening is that it’s hard to find the capacity you need right now. Executives at both companies made it clear that prices are higher for short-term deals—as Volozh described it, “for customers with an immediate time-bounded need.” Companies signing deals lasting several years aren’t paying the same premium.
That makes sense: No one would pay a premium for capacity they need in 2029, say, because by then there will likely be more data centers than there are now (even with the political opposition in many states). The cloud industry is, after all, spending hundreds of billions to expand capacity. Investors might want to take a slightly longer-term view of CoreWeave and Nebius.
Google Raises Prices
Speaking of high prices, the AI-driven lift in memory chip costs continues to ripple across the smartphone sector. Google on Wednesday unveiled its latest generation of Pixel smartphones, with prices $100 above last year’s generation.
The top-tier Pixel 11 Pro, for instance, will cost $1,099, $100 more than the 10 Pro released a year ago. Similarly, the base model, the Pixel 11, will cost $899, up $100 from the Pixel 10. The foldable Pixel will cost $1,899, up $100 over last year’s foldable phone.
The Pixel is, let‘s face it, a niche device (as fun as it might be to use, as I can attest). This price rise won’t win the brand more fans, although it's not like smartphone buyers have much of a choice. Google’s event comes a few weeks before Apple is expected to unveil its latest iPhone lineup. Apple has already raised prices on MacBooks and iPads, and the new iPhones are also expected to cost more. Buying a smartphone is simply getting more expensive.
In Other News
• Thrive Capital founder Josh Kushner and former Walt Disney Co. CEO Bob Iger reached a deal to buy control of one of the most storied franchises in professional sports, the Los Angeles Lakers.
• Sequoia Capital and Wellington Management are in talks to co-lead the latest funding round of Kalshi, the biggest prediction market, The Information reported. Kalshi is in advanced talks to raise at least $750 million in a new financing round at a $40 billion valuation.
• Tencent Holdings said its capital expenditures in the second quarter nearly tripled from a year earlier to 52.8 billion yuan ($7.8 billion), as the Chinese tech giant beefed up its computing infrastructure to train better AI models and meet growing demand for its coding and productivity tools.
• Cisco reported 18% growth in its July quarter earnings, a sharp acceleration on the previous quarter, reflecting how networking technology has been lifted by the AI data center boom. Cisco projected even faster growth for the September quarter.
• Cerebras Systems reported revenue of $180 million for the June quarter, up 281% on a year earlier, but sharply higher R&D costs inflated the company’s operating loss to $477 million.
Today on The Information’s TITV
Check out today’s episode of TITV in which we discuss our reporting on Kalshi’s latest financials.
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