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AI Demand Fuels Surge in Memory Chip Stocks
Micron Technology, along with SK Hynix and Sandisk, has seen a significant surge in stock prices due to increased demand for memory chips essential for artificial intelligence (AI) tasks. Over the past year, Micron’s stock has risen nearly 700%, and Sandisk has surged almost 4,000%. Recently, SK Hynix debuted on the Nasdaq, with American depositary receipts jumping 13% on their first trading day, July 10.
In its latest quarterly report, Micron announced a staggering 345% increase in revenue to $41 billion, driven by high demand from AI data centers, which now constitute major customers for memory chips. The company’s gross margin for data centers reached 87%, with expectations of continued tight supply amid soaring AI demand, projected to last well beyond 2027.
Historically, memory stocks have followed a cyclical pattern, experiencing peaks followed by declines. However, the current AI boom may alter this trajectory, potentially resulting in less pronounced or shorter downturns. Investors remain optimistic, recognizing the crucial role memory will play in the evolving landscape of AI and robotics.
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