Costco margins hit as AI boom drives up memory chip costs
Surging demand for AI memory chips has raised costs for consumer electronics, squeezing Costco's profit margins.
Costco, with all its buying power, cannot protect itself from rising memory chip costs driven by artificial intelligence. The warehouse giant saw gross profit margins fall to 11.01% in its latest quarter.
This compared with 11.12% a year earlier. Consumer electronics prices jumped.
This caused most of the margin decline. Costco's chief financial officer said memory costs on laptops and smartphones rose sharply.
The squeeze is not easing. Companies like Nvidia, Microsoft, Amazon and Meta are racing to build AI infrastructure.
Major suppliers including SK Hynix and Samsung have largely sold out their premium AI memory capacity. Experts expect supply to stay tight into 2027.
This will give chip makers stronger pricing power after several years of weak conditions. Costco still grew total sales 11.1% and online sales 19.5%.
But electronics margins remain under pressure.
- 11.01% vs 11.12% year ago
- Margin decline
- Gary Millerchip
- CFO
- Constrained into 2027
- Supply outlook
- 11.1% total, 19.5% online
- Sales growth
Why it mattersAI demand is reshaping supply chains and pushing up costs across retail. This forces even large operators to accept tighter margins.
AustraliaAustralian retailers importing consumer electronics face the same memory chip cost pressures as Costco, likely leading to higher prices on laptops and phones in local shops.
✓ Claims checked against the source and corrected before publish. checked 2 h ago
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