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Micron Technology and SK Hynix shares rose sharply Tuesday ahead of Big Tech earnings, which will kick off with an update from Google parent Alphabet on Wednesday.
Memory chip stocks are engaged in something of an artificial-intelligence tug of war. They stand to get a boost from any increased AI investment from tech companies, but they also face the risk from the very same companies working on innovations that could reduce the need for their memory chips.
Micron shares closed up 12.2% at $970.82 on Tuesday, bringing its market cap back above $1 trillion following its recent slump. Its shares have risen nearly 800% over the past 12 months.
SK Hynix’s American depositary receipts were up even more, by 13.8% at $171.94. While that’s a big jump for a single day, it’s just $1 above their $170 opening price on July 10 when they first started trading. In South Korea, SK Hynix shares closed up 4.1%.
Investors look to be confident tech companies will raise AI investment, increasing the demand for high-bandwidth memory and other components.
However, shareholders will be also be watching for any signs of software or hardware improvements which could reduce the need for memory as tech companies look to manage the soaring costs of those components.
For example, Google was reported on Monday to be working on a new chip code-named “Frozen v2” which would run AI more efficiently by hardwiring elements of its models directly into the silicon, reducing the need for data transfers—and therefore the requirement for high-bandwidth memory—according to technology-focused news outlet The Information.
The new chip is reportedly targeted for 2028 for deployment and it’s not clear to what extent Alphabet would use it in comparison with other AI chips. The use of the Frozen chip for external customers could be limited by the requirement to maintain the underlying model AI architecture in order for the chips to serve multiple generations of the technology.
A Google Cloud spokesperson said in an emailed statement: “Our teams are constantly researching and experimenting with new innovations . . . while not every project moves into production, this rigorous exploration is central to our full stack approach.”
Micron shares have dropped 16% in the past month, partly due to concerns about the sustainability of memory prices. Chey Tae-won, chairman of SK Group, which controls SK Hynix, said memory prices were “abnormal” and would have to normalize in a press briefing last week, according to local media.
But Wall Street is still confident memory prices are set to rise through 2027.
“Memory demand has been questioned recently with reported technological and process breakthroughs reducing memory demand—but we are yet to see this in reality,” wrote J.P. Morgan analyst Mixo Das in a research note. “The supply of memory equity should not be conflated with supply of physical memory.”
Ulrike Hoffmann-Burchardi, global head of equities for UBS Wealth Management, wrote in a note on Monday that autonomous and self-learning AI agents are set to “dramatically multiply” the volume of compute power required.
“In our estimates, more than 90% of AI activity will be performed by AI agents by 2030,” wrote Hoffmann-Burchardi. “We see this pullback as a buying opportunity for leading-edge chip and semiconductor capital equipment stocks.”
Write to Adam Clark at [email protected] and Anita Hamilton at [email protected]
