The rising costs of memory and storage components are putting pressure on the stocks of hardware makers. Ipek Ozkardeskaya, senior analyst at Swissquote, joins Caroline Hyde and Ed Ludlow on "Bloomberg Tech."

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Hardware manufacturers are experiencing significant challenges due to memory bottlenecks, rising energy and metal prices, and ongoing trade tensions. These factors are increasing input costs, particularly for hardware companies and data centers, and raising concerns among investors about profit margins and sector growth.

Despite strong demand for AI and positive financial results from companies like TSMC, the surge in memory chip prices—reportedly up 30% in the last quarter—has heightened worries about inflation and the ability of companies to pass on costs to customers. Analysts expect the memory bottleneck, along with energy and metal price increases, to be major topics during the upcoming technology earnings season.

Memory bottleneck hits hardware maker stocks

What's really interesting you've been thinking about some of these bottlenecks and we think memory is one. We've been thinking about how infrastructure is one of them as well. We're thinking about how power is to impact. How are investors trying to play this. Are they still worried about an eye bubble or they still all in on the areas that still are in demand. Well there are now bottlenecks are trying to pop as you say. One is energy and memory chess. We also have a heavy rise in metal prices especially copper prices that are pressuring input prices higher. And these pressure and input prices started to worry investors in many segments. Not all segments are concerned but many segments especially hallway companies and data centers are now feeling the pinch of higher input costs and eventually higher energy prices as well. And one of the other problems is obviously the trade tensions potential shock to supply chains. And all of that is just playing quite negatively into this. A.I. optimistic AI narrative that we had seen over the past three years. And then comes TSMC that sort of eased a lot of that anxiety saying that I demand we see it. Sure we're cautious but we see it and we build. What does that mean about the ultimate story. How much did optimism get raised back. Well it did. TSMC beat estimates. I was not as surprised as just another quarter of very strong results from TSMC. And they say that the demand and AI remain strong and they're building more data and more and more chip plans. Excuse me. And that also justifies TSMC is building chip plans outside the United States and Japan and Europe and obviously in the U.S. as well. So the demand remains strong. But building these chip plans and building the data centers requires confidence and the confidence the supply of confidence is unfortunately not infinite infinite. So that is going to be a bottleneck and that's going to be the capacity constraint that could eventually become a headache for the sector and the growth expectations. If I showed you a long term chart of memory spot pricing. It would be for a number of years basically steady only because of the severity in the surge in the last month. At this juncture do we need to start talking about the impact of memory. You mentioned energy as well on inflation and have a more economic discussion about what this shock this bottleneck is causing. But obviously there are now rising worries about the fact that all of these A.I. demand and resources being limited is going to start pushing prices higher for the memory chips. We're talking about very big numbers. I mean 30 percent rise only in last quarter according to some songs report earlier this month. And as Ryan also said I mean this is a very important component of hardware companies and it's will eventually start pressuring their their their profit margins and leads to a price pressures. Now the question is how much of these costs of these additional costs will be pushed on to the end customers. The reality is that we do not know. But the higher the demand the higher the prices are going to be going up and the higher the pressure will be on the profit margins. There the competition is going to be important. The higher the competition or the bigger the impact on profit margins. And these companies will not be able to push the prices too high because well then there will be there will be implications on the demand side. The memory bottleneck is that going to be the talking point of this technology earning season. Well yes I think that is going to be one of the major talking points along with energy and the metal prices as well. All of these input prices are rising. The other thing that we will be really watching very closely in this earning season is the obviously the headline numbers. But not only we will be also looking very closely into how the revenues are being backed and how the loans are also being backed in order to not let the technology companies build this narrative but also try to dig into the rest that could be underlying.

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