KeyBanc Capital Markets states that the demand for semiconductors, crucial for powering artificial intelligence (AI) applications, is on the rise. Analyst John Vinh has reaffirmed his Overweight ratings for Advanced Micro Devices (AMD), Nvidia, and Micron Technology. He has also increased his price targets for these companies: $195 for AMD (up from $170), $740 for Nvidia (up from $650), and $115 for Micron (up from $100).
Mixed findings were seen in the quarterly supply chain, with weak broad-based end-demand trends due to inventory destocking in the auto and industrial sectors. However, AI demand remained strong despite these challenges.
During Tuesday's trading session, AMD stock rose by 6.7% to $156.36, Nvidia shares increased by 2.3% to $559.80, and Micron Technology stock climbed by 2.6% to $84.52.
Vinh's recent observations were particularly favorable for AMD, especially regarding its AI products and server processors. He noted a significant increase in demand for the MI300X and positive feedback from the server supply chain regarding the growing demand for AMD Genoa, which is expected to gain market share against INTC Sapphire Rapids.
AMD's MI300 is a data center graphics processing unit designed specifically for AI projects and applications. Vinh estimates that there could be up to $8 billion in demand for AMD's MI300 this year, compared to his previous estimate range of $3 billion to $4 billion.
Regarding Nvidia, Vinh mentioned that the company plans to release its next-generation AI chip, the B100, in the third quarter. This chip is expected to offer 50% better performance than its predecessor with a 40% higher price tag.
Additionally, positive feedback has been received regarding Micron's HBM3E memory chips, which are set to launch later this year. These chips will be used in advanced AI server chips. Vinh estimates that Micron may hold as much as a 70% market share inside Nvidia's upcoming B100 GPU.
Micron is a prominent manufacturer of dynamic random-access memory (DRAM) used in computers and servers, as well as flash memory found in smartphones and solid-state hard drives.
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