Advanced Micro Devices (AMD) and Micron Technology (Micron) are two chip stocks that investors should consider buying, according to KeyBanc Capital Markets analyst John Vinh. Both companies are well-positioned to benefit from the increasing adoption of artificial intelligence (AI) technology, much like industry leader Nvidia.
Nvidia has witnessed tremendous growth over the past year, driven by the robust demand for its AI chips. As a result, the company’s revenue is set to more than double in its current fiscal year. This impressive performance has been reflected in Nvidia’s soaring stock price, which has risen by 222% in the past year.
KeyBanc believes that AMD and Micron have the potential to capitalize on the growing AI market, much like Nvidia. Vinh has upgraded his price target for AMD to $195, representing a 19% gain from its current levels. The analyst highlights the strong demand for AMD’s server processors and newly launched AI-focused accelerators. Vinh predicts that AMD’s AI accelerators could generate $8 billion in revenue by 2024, a significant jump from the previous estimate of $3 billion to $4 billion.
The increased estimate is supported by AMD’s efforts to strengthen its supply chain. The company’s partnership with Taiwan Semiconductor Manufacturing (TSMC) is expected to significantly increase its packaging capacity for advanced chips. With a larger supply of AI chips, AMD has the potential to surpass its current revenue expectations and deliver stronger-than-anticipated growth in the coming years.
Micron also stands to benefit from the AI boom, particularly in the high-bandwidth memory (HBM) chip market. The demand for HBM chips is rapidly increasing as they are deployed in AI servers for training large language models. KeyBanc’s supply chain checks indicate that Micron is well-positioned to take advantage of this trend, with an expected 70% market share in Nvidia’s upcoming B100 data center graphics processing units (GPUs).
The increasing demand for HBM chips, combined with Micron’s strong partnership with Nvidia, has the potential to drive significant top-line growth for the company. Revenue estimates for Micron have already been raised, and the trend is expected to continue as AI-driven adoption of memory technology increases.
Investors looking to capitalize on the growing AI market should consider buying AMD and Micron. Both companies have favorable growth prospects and are trading at attractive levels. With the potential for substantial gains in the coming years, these chip stocks could offer impressive returns for investors.
Disclaimer: The views expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
