Alphabet Inc. Class C (GOOGL.US) Compression technology triggers storage chip "earthquake", Analysts wield Jacobs paradox: don't panic, demand will only increase

Due to research released by Alphabet Inc. Class C (GOOGL.US) researchers on a new compression technology, concerns about demand in the market have caused a significant drop in the stock prices of computer memory and storage products, but this impact may only be a short-term disturbance rather than a threat to survival. In the South Korean stock market, the key storage chip manufacturer for AI applications, SK Hynix, fell by 6% at one point. In the Tokyo market, flash memory manufacturer Kioxia Holdings fell by 4.4%. Earlier, Micron Technology, Inc. and SanDisk also recorded similar declines in the New York market on Wednesday. Alphabet Inc. Class C stated that their new TurboQuant technology can significantly reduce memory usage for large language models and vector search engines. However, some bulls who are optimistic about the strong rise in global memory chip demand this round believe that efficiency improvements may actually increase rather than decrease demand - a theory known as "Jevons Paradox." Morgan Stanley's trading department referenced this 19th-century theory in a report. Analysts at the firm stated that investors may take profits based on this news, but memory demand does not pose a threat in the short term. Driven by the vigorous demand brought about by the AI boom, prices of memory and storage products have been rising continuously in recent months due to supply shortages, leading related stocks to show exponential gains, such as Kioxia which has accumulated a 700% increase since the end of August last year. Alphabet Inc. Class C's news has sparked cautious sentiment in the market about the potential decrease in demand, but some analysts have refuted this, suggesting that the actual situation may be the opposite. The Jevons Paradox originated from a theory by a British economist regarding coal production, which pointed out that as efficiency increases, demand actually rises. Last year, concerns about a decline in demand for advanced technology due to the low-cost AI model DeepSeek in China also led to mentions of this theory. Analyst Andrew Jackson of Ortus Advisors wrote in a report on the Smartkarma platform that given the "extremely tight supply," the impact of Alphabet Inc. Class C's breakthrough technology on demand is "minimal." For Kioxia, "after experiencing such a huge surge, some profit-taking is reasonable."