Why Are AI Hardware Prices Going Up?

Erik Bernhardsson says AI hardware prices are going up because capacity is tight while big buyers take as much supply as they can, even though hardware prices normally fall like gravity. He does not think GPU supply is a fully cornered resource.

NVIDIA is delivering several hundred thousand Blackwells a month. Paying a higher price than everyone else still gets GPU capacity, even as Anthropic and OpenAI buy up as much as they can, and supply keeps coming onto the market. The rise could last another six months or another 36 months. He likens the rush to buy capacity ahead to the great toilet paper shortage of the pandemic and to a run on the bank. Capacity will stay tight for a while. Reservations already locked in at a rate leave his company, to some extent, effectively long GPU prices, and scarcity means customers can be charged more.

He worries more about prices collapsing than about prices going up. He does not think a collapse will happen anytime soon, but it would be quite bad for anyone who locked in a lot of supply, because they paid too much. There is a risk of buying at the top.