Amazon hikes capex to $220B as memory costs soar

Shares of memory chipmakers rallied in after-hours trading Thursday after Amazon Amazon.com, Inc. ↗ 3.90% and Apple ↘ 1.41% both flagged escalating memory costs during their earnings calls, reinforcing expectations of a sustained supply crunch driven by insatiable AI demand.

Micron Technology ↗ 18.36%, SanDisk Western Digital Corporation ↗ 15.37%, Western Digital, and U.S.-listed shares of SK Hynix ↗ 17.52% jumped between 2% and 8% after hours, extending gains from the regular session.stocktwits

Amazon Raises Capex to $220 Billion

Amazon CEO Andy Jassy disclosed on the company's second-quarter earnings call that the retailer now expects to spend approximately $220 billion in capital expenditures in 2026, up from a prior estimate of about $200 billion, citing the higher cost of memory chips as a key driver. "The higher cost of memory is pushing this number up from our prior estimate of about 200 billion," Jassy said.reuters+2

The capex increase came alongside a strong quarter for Amazon Web Services, which posted revenue growth of 37% year over year to $42.2 billion, according to Reuters, well above analyst expectations of roughly 31% growth.reuters

Apple's "100-Year Flood" on Memory Pricing

On what was Tim Cook's final earnings call as Apple CEO, Cook characterized the current memory market as a "100-year flood" with exponential price increases. Apple had already raised Mac and iPad prices in June in response to surging memory costs.macrumors

"Looking ahead to September, we project even steeper memory costs," Cook said during the call, noting that the DRAM market is dominated by just three primary suppliers. Cook added that Apple expects to partially offset higher memory expenses with lower costs on some non-memory components and existing inventory stockpiles.stocktwits+1

A Reinforcing Cycle

The memory cost surge stems from hyperscaler demand for AI infrastructure, which has created supply constraints across DRAM and NAND markets. Samsung warned Thursday that the memory crunch could last until 2028. The dynamic has created a feedback loop: rising memory costs push up capex budgets, which in turn signal sustained demand and further tighten supply.stocktwits

Strong earnings from Microsoft ↗ 15.51%, whose shares surged as much as 15% after reaffirming its capex plans, and Lam Research ↗ 17.98% added further momentum to semiconductor sentiment.cnbc+1