023Where is the unit growth left in AI hardware?

Units times price

Every hardware supplier’s revenue is units shipped times the price of each unit. In the AI buildout the two have moved very differently. Memory makers sold roughly the bits they would have anyway, at contract prices that rose about sixfold for conventional DRAM from the third quarter of 2025 to the fourth of 2026 (pack 022). Optics makers are shipping far more lasers and modules than a year ago. The question for the next three years is which of the two is left, and whether the market pays for one more than the other.

For each of seven segments we counted the physical unit that best measures volume, took 2026 to 2029 paths for units and for price per unit from company guidance and published forecasts, and set them against the P/E on 2027 consensus earnings for the fourteen stocks most tied to them. A unit is a module for optics, a bit for memory, an exabyte for hard drives, a package for GPUs, a socket for CPUs, a gigawatt for gas turbines and fuel cells. Custom AI chips, from pack 012, are drawn alongside for comparison.

Segment by segment

• Fuel cells: +55% a year, price flat. Bloom doesn’t report megawatts. Its guided 2026 revenue at about $3,500–4,000 a kW is roughly 1.2 GW, and Morgan Stanley has 2.1 GW in 2027 and 3.7 GW in 2028. Bloom is on track for 2 GW a year of factory capacity by the end of 2026 and is preparing to go beyond 5 GW, adding it as orders come rather than on a fixed schedule; Oracle alone has contracted 1.2 GW. This is the purest unit story here.
• Optics: +32% a year in modules, more in lasers. Forecasts are far apart. Nomura has 800G and 1.6T modules going from about 80M in 2026 to 217M in 2028, about +64% a year, and laser chips from 480M to over 1.5B. BofA has 800G flat in 2027 and 1.6T up at least half, about +20% in modules. Our base, +25% in 2027 and +40% in 2028, sits between them; our high case follows Nomura. Supply covers only 50–60% of 2026’s 1.6T demand (BofA), and shortages have slowed the usual price declines (Cignal AI), so price has been doing part of the work: Lumentum’s revenue rose 136.5% from a year earlier, while its EML units are on track to grow by just over half. As Coherent more than doubles its indium-phosphide laser output again by the end of 2027 and Lumentum’s Greensboro fab starts adding revenue in early 2028, units take over and price per module drifts down, about 4% a year in our base case.
• Hard drives: exabytes +25% a year, drives flat. Seagate plans about 25% a year more nearline exabytes, with supply allocated through 2028, and Western Digital sees demand growing 25% or more a year. Both are growing through denser drives, not more of them; Western Digital says it won’t add unit capacity. Its price per TB is up 28% from a year ago, and Seagate’s revenue per TB about 33% on our math. We have price rising another 15% in 2027 as locked build-to-order prices carry over, then easing.
• Memory: bits +21% a year, the price already spent. Bit growth is not slow: Micron expects industry DRAM bits up in the low 20s and NAND in the mid 20s in 2027 and 2028. Price is what moved. TrendForce has 2026 DRAM sales up 303% and NAND 281%; on bit growth of about a fifth, revenue per bit comes to more than three times 2025’s (our estimate), and 2027 adds another step as those rises carry over and HBM reprices. From 2028 new fabs arrive and pack 022’s plan path has price per bit falling about 10% a year; Bernstein has SK hynix’s DRAM price falling by more than half in 2028.
• Server CPUs: sockets +21% a year, price +9%. Agentic AI needs more general-purpose compute per accelerator. TrendForce has shipments up 31% in 2026 and over 40% in 2027; DIGITIMES Research has general-purpose and AI server CPUs together up about 33% in 2027. Our base takes +35% in 2027, slowing after. Price isn’t the unknown it looks: list prices rose 10–20% from March as Intel and AMD sold out, and the average socket costs more still as buyers move to chips with more cores. In our base case Arm-based chips grow about 45% a year as hyperscalers move to their own designs, and Intel, short of supply, about 7%. AMD expects its server revenue to double in 2027.
• GPUs: packages +15% a year, price +17%. Nvidia ships about 7M packages in 2026 on our estimate (Bernstein has 6.7M GPUs) and, in our base case built on Bernstein, Morgan Stanley and Omdia, about 9.6M in 2029: +11% a year. Pack 012, which starts from HBM supply, has 6.3M growing about 8% a year. Nvidia calls its outlook for fiscal 2028, about 70% revenue growth, supply-constrained, so price does more of the work: revenue per package rises about 35% in 2027 as Rubin racks, about $7.8M each with $2.0M of it memory (Morgan Stanley), replace Blackwell. AMD is the exception, growing on units from a small base; it expects data center AI revenue to more than double in 2027. The accelerator units are going to custom chips, about +29% a year in pack 012.
• Gas turbines: +15% a year, realized price +12%. GE Vernova’s deliveries follow its factory: about 17 GW in 2026 on our estimate (it shipped 5 GW in the third quarter), output of 20 GW a year from the third quarter and 24 GW in 2028. Production is mostly sold out through 2030, and it is now taking reservations for 2032. Orders priced about 50% more per kW in 2026 than in 2025, and they ship over the next four years, so realized price keeps rising even if new-order prices flatten.

Does the P/E follow the units?

More than it follows price growth, and less than it follows price already made. At the Nov 5 close, each extra 10 points a year of unit growth came with about a 31% higher P/E on 2027 earnings. But across all fourteen, unit growth explains only 18% of the spread in P/Es (R² 0.18), and with so few stocks a link that weak could be chance: the 95% range runs from −9% to +90% per 10 points. Price growth still ahead has a similar slope but explains less (R² 0.04), because it varies less from stock to stock.

The link is clearer where these products are the business. For Intel, Arm and GE Vernova they are under half of revenue (about 45%, 15% and 40% on our estimates), and all three trade well above the line: Intel at 29.0x on depressed earnings, Arm at 58.5x on its royalties, GE Vernova at 29.8x. Among the other eleven, unit growth explains 53% of the spread, and each extra 10 points a year comes with a 57% higher P/E. Without memory as well, it still explains 56% across the eight left. Dropping stocks after looking at them flatters any fit, so take these as the top of the range; the bottom is R² 0.10, all fourteen without Arm.

The clearest pattern is about price that has already happened. What separates the cheapest stocks from the rest is how much price has already gone into 2027’s earnings. Memory’s revenue per bit in 2027 is about 4.6× its 2025 level on our estimate, and Micron, SanDisk and EWY trade at 3.1x–4.0x, the three furthest below the unit-growth line. Hard drives (1.4×) and Nvidia (about 2.0×) come next, at 8.2x–11.8x. Across all fourteen, price already in explains 66% of the spread, and once it is allowed for, unit growth adds little. Nearly all of that is memory, though: without the three memory names, price already in explains 8%.

What the selloff did

The Nasdaq closed at a record on Oct 6. By Nov 5 the Nasdaq-100 (QQQ) was 15% lower, after the Nasdaq’s worst day since April 2025: down 5.5%, with the Philadelphia semiconductor index down more than 12%, as investors weighed what Democrats’ sweeping midterm wins could mean for AI regulation. Some Democrats had called for pauses on new data center projects (pack 020 has the Texas version). Our fourteen fell further. Their median price fell 43% in a month and their median P/E 47%, while the median consensus for 2027 EPS rose 5%. Over three months, P/Es are down a median 40% with estimates up 10%.

The cut was about as deep whatever the unit growth. The five stocks with 30% a year or more of unit growth ahead (Lumentum, Coherent, AMD, Arm and Bloom) lost a median 48% of their P/Es in a month; the other nine lost 47%. SanDisk (−55%), Seagate (−50%) and Western Digital (−48%), all price stories, fell as far as Coherent (−50%) and Bloom (−48%). Unit growth explains 10% of the differences in how far P/Es fell. Nvidia (−25%), GE Vernova (−29%) and EWY (−30%) held up best.

Lumentum and Marvell fell most, partly because of their deal. Marvell is down 53% since Oct 6, most of it after talks to buy Lumentum were reported on Oct 29, and Lumentum, due 4.5 Marvell shares under the Nov 2 agreement, trades 15% below what the offer is worth. Because the cut was so even, the market’s ranking barely moved: each extra 10 points a year of unit growth came with a 33% higher P/E on Aug 7, 37% on Oct 6 and 31% now (58%, 65% and 57% across the eleven). What changed is the level. Estimates kept rising while multiples fell: Micron’s 2027 EPS is +17% in three months and Western Digital’s +36%. The market is paying less for higher earnings.

Where the unit growth is left

The most is in fuel cells and optics. Bloom’s gigawatts grow about 55% a year with price flat, and optics’ modules about 32%, with laser chips faster still. Little price is already in their 2027 earnings: about none for Bloom and Coherent (1.0× and 0.9×), a little for Marvell (1.1×), more for Lumentum (1.6×). They trade at 31.5x and 16.0x (the optics median) after losing about half their multiples in a month.

Hard drives, server CPUs and memory still have plenty of units, about 21–25% a year. Hard drives and memory come with earnings the market appears to treat as peak: from 2025 to 2027 price per TB rises about 1.4× and revenue per bit about 4.6× on our estimates, and they trade at 8.5x and 3.5x. The average CPU socket’s price rises about as much as hard drives’ (1.4×, partly more cores per socket), yet the CPU stocks trade at a median 29.0x, on Intel’s depressed earnings and Arm’s royalties rather than on sockets.

The least is in GPUs and gas turbines, about 15% a year each, both held back by supply. Nvidia calls its outlook for fiscal 2028 supply-constrained, and GE Vernova’s deliveries follow its factory. Price does about as much of the work as units. The market pays 11.8x 2027 earnings for Nvidia and 29.8x for GE Vernova, where gas turbines are about 40% of revenue on our estimate and the price rises are already booked in a backlog mostly sold out through 2030; Nvidia’s depend on the next rack. Among accelerators, the units have moved to custom chips: about 29% a year in pack 012, against about 8% for Nvidia on the same basis.

What would change the ranking

• Which optics forecast is right. LightCounting expects slower growth after three years of 65–93% growth in Ethernet transceiver sales, with more conservative projections for 2027–31, and BofA has 800G flat in 2027. Our low case is 15% a year. On Nomura’s numbers, our high case, optics grows about 50% a year, close to fuel cells. Linear-drive and co-packaged optics also strip DSPs out of a growing share of ports, which cuts Marvell’s units even as lasers grow.
• Supply catching up. TSMC’s CoWoS shortfall was expected to narrow from about 20% of demand to about 10% by the end of 2026 (Economic Daily News via TrendForce). If Nvidia’s packages grow with supply rather than with demand for its pricing, GPU units move up the table and price down it.
• Bloom’s base year. Bloom doesn’t disclose megawatts. If 2026 is 1.0 GW rather than 1.2, the growth rate is about 65%; at 1.4 GW, about 48%.
• Hard drives and solid state. With drive makers’ gross margins near 60%, against about 30% historically, cloud buyers have reason to qualify high-capacity flash. TrendForce expects NAND supply to pass demand in the second half of 2027, though Micron says supply stays much tighter in 2027 and 2028 than in 2026. A looser NAND market would make switching cheaper.
• Memory’s floors. Micron’s 26 long-term agreements cover about 35% of its DRAM bits through 2030, mostly priced within floor and ceiling bands, and SK hynix’s cover more than half of its planned 2027 and 2028 output. If they hold, memory’s price behaves more like contracted volume, and the market may stop treating its earnings as peak.

What to watch

Nvidia, Nov 17. Whether supply still caps fiscal 2028 at about 70% revenue growth, and what 2027 units the guide implies. A bigger unit step would undercut the “price, not units” read.

Marvell, Dec 1. Electro-optics growth against Lumentum’s, and anything on the deal’s shareholder votes and regulatory reviews. The discount on Lumentum prices the odds of closing, the time it takes and what Lumentum would be worth if the deal broke.

Micron, late December. 2027 bit growth against price; whether customer inventory and falling NAND wafer spot prices, down 9% in the week of Oct 26 alone, start to show in contract prices.

Seagate and Western Digital, late January. How 2028 allocations price. A third year of price-per-TB gains would make hard drives less of a units story still.

GE Vernova and Bloom, January and February. Gigawatts under contract, now slowing at GE Vernova, and Bloom’s first 2027 guide, which would put a company number on its megawatts.