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The third wave of inflation is coming. |
And we can blame Artificial Intelligence for the latest spike, according to the Wall Street Journal. |
The first wave was COVID supply chains. The second was the energy shock after Ukraine. This one is different. It's structural. And it’s thanks to the AI boom. |
Monthly spending on data center construction was about $600 million in 2019. It's now over $4 billion a month. That's a 7x jump in seven years – and this growth is accelerating. |
Five companies are driving the AI spending boom: Alphabet, Amazon, Meta, Microsoft, and Oracle. Combined capex for 2026 is projected at roughly $741 billion — up about 75% from last year. |
The total Ai buildout through 2032 could hit $8 trillion. That's nearly five times the value of all New York City real estate, according to Columbia economist Stijn Van Nieuwerburgh. |
Now the part most people aren't pricing in. |
For most of the last decade, prices for computers, tablets and other technology gadgets fell every year. Now prices are growing at roughly +15% year over year — the sharpest reversal in the history of the series. |
The reason is simple. |
AI data centers are expected to consume around 70% of all memory chips produced globally this year. That pulls supply away from everything else. |
DRAM prices rose as much as 98% in the first quarter of 2026, with another 58% to 63% jump expected this quarter. Some people are calling it "RAMageddon." |
And yesterday, the most valuable consumer electronics company on earth blinked. |
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Apple (Nasdaq: AAPL) raised prices on its MacBooks and iPads — by up to $300 on some models. The 13-inch M5 MacBook Air went from $1,099 to $1,299. Even the entry-level MacBook Neo, the cheap laptop Apple built to fight Windows machines, jumped from $599 to $699. The iPhone was spared, for now. |
This is incredibly rare. |
Apple almost never talks about cost pressure in public. This time it said in a statement that it had "never seen a component price increase this much, this quickly." CEO Tim Cook called it a "hundred-year flood" and said he hasn't seen anything like it in over 40 years. |
Investors didn't like the news. Apple stock closed down more than 6% — its worst day since April 2025. Apple's gross margin had already slipped about two points to 38.7%. Microsoft followed hours later, raising Xbox prices and warning console memory costs could double again by 2027. |
Then there's the ongoing power issue. |
Data centers are now the fastest-growing source of US electricity demand. Goldman Sachs expects them to drive nearly half of all US power demand growth through 2030. Retail electricity prices are forecast to rise about 6% a year in 2026 and 2027. That hits every family, factory, warehouse, and office in the country. |
Here's how I read it as an investor. |
The same force raising prices at the Apple store is a windfall for the company supplying the memory. And it reported earnings this week. |
Micron (Nasdaq: MU) makes the high-bandwidth memory that sits next to every AI chip. Its entire 2026 production is already sold out — every unit priced and contracted before it left the fab. Memory makers like Micron have been steering supply to AI chipmakers like Nvidia, which is exactly why Apple got squeezed. |
Look at the trajectory Micron just laid out: |
Q3 revenue (reported June 24): roughly $35 billion, more than quadruple a year ago Q4 revenue guidance: about $50 billion Gross margin: jumped from about 39% a year ago to roughly 85% — higher than Nvidia or Meta 2026 capex: raised to roughly $27 billion
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A company doesn't raise its capital spending plan when it expects demand to fall off. Micron crossed $1 trillion in market cap last month — the second memory company in history to do it. |
That's the trade hiding inside the inflation story. Apple is paying the bill. Micron is cashing the check. Here’s the chart showing the YTD performance of Micron (green) versus Apple (yellow) |
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The buildout is the economy's biggest tailwind and its most stubborn headwind at the same time — and the companies supplying it sit on the right side of both. |
My team just unveiled a new AI Profit Predictor. It’s an innovative way to use AI to find trades with a high probability of profit. And it’s already delivering amazing results. |
This includes +100% gains with Tesla, Freeport, Disney, Iron Mountain and Paramount since May 14. Plus, a 228% gain on Freeport on June 22. |
That’s 6 triple digit winners in the last 60 days! |
Here’s a link to get this week’s upcoming trades. |
Ian Wyatt
Editor, Daily Profit |
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