NVIDIA and Micron stocks experienced upward momentum this week as investors reacted to strong demand forecasts driven by artificial intelligence (AI) infrastructure spending. NVIDIA shares were reported at $209.74, down 1.09% at the time of publication, while Micron and other memory stocks surged in premarket trading, reflecting heightened investor interest in the sector.
AI Infrastructure Demand
Investors are optimistic about memory manufacturers like Micron, Sandisk, and SK Hynix, as they are expected to benefit from sustained demand for high-bandwidth memory (HBM) and DRAM. Morgan Stanley's Andrew Slimmon noted that there is a scarcity of memory chips and compute power, which is unlikely to be resolved soon. He emphasized that the current AI infrastructure buildout is still in its early stages, contrasting it with past boom-and-bust cycles. Slimmon stated,
There’s a scarcity of memory chips. There is a scarcity of compute power. I don’t think that will be resolved in the near future.
Positive Outlook for Memory Stocks
Analysts, including Morgan Stanley's Joseph Moore, see the recent pullback in memory stocks as an attractive buying opportunity. They believe that the ongoing investment in AI infrastructure will continue to tighten supply, thus supporting prices. Slimmon highlighted that while some memory stocks had become overhyped earlier in the year, recent price adjustments have made valuations more appealing. Investors are encouraged to focus on areas of scarcity within the memory sector, which is at the center of AI-related investments.
Related coverage: Nvidia Stock Valuation Nears Decade Low Amid AI Demand.
The rising demand for AI infrastructure is likely to benefit memory stocks, particularly Micron, as firms invest heavily in data center capacity. This trend could lead to firmer pricing in memory products, influencing stock performance in the semiconductor sector.
Watch for upcoming earnings reports from major tech companies, including Alphabet, which may provide insights into hyperscaler capital spending and its impact on memory demand.