MU, AMD, MRVL, QCOM Stocks Surge — Bernstein’s Stacy Rasgon Says AI Demand Is Exploding, Memory Capacity Is 'Very Tight'

• Rasgon said that the gross margins on memory products are currently above 90% and that this level has never been seen before.
• He also dismissed concerns about growing competition in the semiconductor space for companies like Nvidia and Broadcom, amid reports of Meta planning to build its in-house AI chip.
• According to an Investing.com report citing data from UBS, memory sales in July hit a new monthly record of $74.6 billion, surging nearly 32% month-on-month.

Shares of Micron Technology Inc. (MU), Advanced Micro Devices Inc. (AMD), Marvell Technology Inc. (MRVL), and Qualcomm Inc. (QCOM) surged in Thursday morning’s trade amid a broader rise in semiconductor and memory stocks.

During an interview with CNBC, Bernstein analyst Stacy Rasgon said that tight memory capacity and an explosion in AI demand are all adding up to the momentum in the chip sector.

“Memory capacity is very, very tight right now. We need a lot of it,” he said, while adding that Micron’s decision to increase its planned investment in the U.S. to $250 billion from $200 billion through 2035 is a “great” development for the sector.

Current Level Of Gross Margins In Memory Prices ‘Never Seen Before’

Rasgon said that the gross margins on memory products are currently above 90% and that this level has never been seen before.

“AI demand is just exploding… it’s driving tons of demand for everything that they’re making and they need the added capacity,” he said, speaking about Micron’s investment expansion.

Micron also announced an investment of up to $3 billion to strengthen the semiconductor supply chain in the U.S., including $500 million in GlobalWafers to expand its 300mm raw silicon wafer manufacturing facility in Sherman, Texas.

Rasgon Says Everything In AI Currently Translates To More Chips, Wafers

Rasgon added that the current state of the AI industry is translating into more chips, wafers, and AI tools.

“Semicap is currently caught up in a pretty big bid on that theme over the last year as investors start to look for this capacity to come online,” he said, referring to the semiconductor capital equipment sector.

As for Meta Platforms Inc.’s (META) plans to begin manufacturing its in-house AI chip, Rasgon said that it was pretty much a given and acknowledged that there could be more competition in this segment going forward.

“The pie is getting bigger as well and getting massively bigger. I don’t really worry so much about competition, who’s winning or losing… in semiconductors, there’s always competition,” he said, while adding that it is fine as long as the pie itself is growing.

He believes that the market leader, Nvidia Corp. (NVDA), could bring in $500 billion in data center revenue next year.

“Everybody right now is selling pretty much everything that they can make as AI gets bigger and bigger and kind of drags everything along,” he said, dismissing concerns about growing competition in the semiconductor space for companies like Nvidia and Broadcom Inc. (AVGO).

Memory Sales Hit New Monthly Sales Record

According to an Investing.com report citing data from UBS, memory sales in July hit a new monthly record of $74.6 billion, surging nearly 32% month-on-month.

Sales of NAND soared 41% in July from the previous month, reaching $25.8 billion, while DRAM sales surged nearly 28% to $48 billion, according to the report.

“Our July Memory Monthly suggests that the memory upcycle is strengthening further amid accelerating AI-driven demand and ongoing LTA negotiations," UBS said in its report.

The iShares Semiconductor ETF (SOXX) is up 142% over the past 12 months, while the Global X Artificial Intelligence & Technology ETF (AIQ) is up 46%.

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