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Artificial intelligence is attracting growing interest and its development is accelerating. Optimistic forecasts suggest significant progress, with an expected increase of 42% in 2024. But what are the elements that could favor such an expansion next July?
Growth drivers in the semiconductor sector
The industry semiconductors is in a recovery phase this year, fueled by growing demand for chips in varied applications such as smartphones, THE personal computers (PCs) and the data centers. However, a particular subsector, that of memory chips, is growing even faster than the general semiconductor market.
Growth Forecasts for Memory Chips
According to the Semiconductor Industry Association (Semiconductor Industry Association), the global semiconductor market is expected to record revenue growth of 16% this year. In contrast, memory chip market could see 66% growth, research firm says Gartner. So, companies like Micron Technology And Lam Research benefit greatly from this trend.
Impact of artificial intelligence (AI) on memory demand
During the last financial results conference, the management of Micron Technology highlighted the increasing demand for memory used in computer chipsartificial intelligence (AI), including high-bandwidth memory (HBM). Micron announced that its HBM capacity is « sold through the end of 2025 », with prices already contracted for the majority of 2025.
This strong interest in HBM encourages memory manufacturers like Micron to increase their production capacities. For example, SK Hynix And Samsung both plan to double their HBM production capacity by 2025.
Lam Research’s outlook
Lam Research, which derives 44% of its revenue from the sale of memory equipment, is well positioned to benefit from this growing demand. The company projected revenue of $3.8 billion for the final quarter of its fiscal 2024, which would represent 19% year-over-year growth. For the full fiscal year 2024, Lam forecasts revenue of $14.9 billion, although that represents a 15% decline from the previous year.
Return to growth thanks to AI
Sales of AI-equipped smartphones and PCs are expected to increase significantly in the coming years, creating an increased need for memory chips. For example, Micron is seeing a 50-100% increase in memory capacity in AI smartphones this year compared to the previous year. Likewise, PCs with AI should include 40 to 80 percent memory DRAM additional.
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According to the industry association SEMI, equipment spending for DRAM is expected to grow at a compound annual rate of 17% through 2027, while storage spending NAND flash could increase at an even more impressive rate of 29% over the same period.
Opportunities for investors
Analysts predict that Lam Research could post solid growth starting in fiscal 2025. If the company reports good results this month, Wall Street could reward this acceleration in growth with a rise in its stock price. Developments in the memory market suggest that Lam could exceed expectations and deliver strong forecasts, bolstered by a potential increase in spending on memory equipment.
So, it might be wise to consider this AI stock as a potential investment, as its upcoming quarterly report could give it a significant boost.
