Infrastructure capacity deficits keep hardware demand completely inelastic to double-digit price hikes.
Because AI workloads are severely supply-constrained rather than demand-constrained, leading hardware designers can implement massive price increases to protect their margins without triggering any reduction in buyer procurement.
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It shows that despite experiencing margin compression from supplier pricing, Nvidia can confidently plan price hikes to recover profitability because insatiable demand makes customers highly inelastic.
Because data center and power expansions cannot keep pace with customer needs, hyperscalers face structural capacity deficits that compel them to keep buying hardware regardless of costs.
Severe capacity deficits enable the dominant chipmaker to seamlessly pass double-digit price hikes down to desperate hyperscale customers.