The brains of the AI rally are finally catching up
Few stocks have surged like Nvidia in recent years. It owes its 1,700%, five-year rise to newfound demand for artificial intelligence (AI) hardware — and other companies are joining the fray. First, it was Super Micro, a server producer, which saw a near 1,000% increase over the past year from its connection to Nvidia’s products — and now, semiconductor firms producing memory for AI hardware are also on the rise.
- WSJ notes that high-bandwidth memory (HBM) is “crucial for AI number crunching” in Nvidia and AMD products— but only a few companies produce it, creating a tight market.
- SK Hynix and Micron Technology have been the main benefactors of demand, with their stocks doubling since the start of 2023 to surpass $100B in market cap.
Forward-looking: Although some analysts like ARK Invest’s Cathie Wood warn that the AI rally might have run its course, Bank of America analysts recently upgraded Micron, anticipating a jump as “demand for high-bandwidth memory increases.” This could benefit SK Hynix and its South Korean neighbor, Samsung Electronics — which is trialing a new HBM chip to take on its main competition.
