Nvidia Dominates AI Chip Market Amid HBM Shortage
Nvidia (NASDAQ: NVDA) continues to lead in the AI chip market, leveraging its graphics processing units (GPUs) essential for training large language models (LLMs). The demand for high-bandwidth memory (HBM) has surged due to its critical role in improving GPU performance, causing supply shortages across the DRAM industry. HBM requires three to four times the wafer capacity of standard DRAM, leading to significant price increases.
Micron Technology (NASDAQ: MU), a DRAM leader, reported a 57% revenue growth for its fiscal first quarter, with adjusted EPS soaring to $4.78. Micron anticipates the HBM market will grow at 40% annually through 2028, potentially reaching $100 billion. In response to this demand, Micron increased its capital expenditure budget from $18 billion to $20 billion, with plans to construct new manufacturing facilities in New York and Idaho.
The current market dynamics favor Micron, as AI chip growth drives demand for HBM. The company’s supply is fully booked for the year, and it is expected to benefit from rising prices while maintaining strong free cash flow.
