The discussion focuses on the importance of high bandwidth memory (HBM) in the artificial intelligence (AI) industry. HBM is crucial for providing GPUs with high-speed access to DRAM, enabling advanced AI operations. The market for HBM is dominated by three companies: SK Hynix, Samsung, and Micron (NASDAQ: MU). We discuss the current situation in HBM, and why dynamics could be favorable to Micron even after its recent stock rally.

Why Micron Has Incredible Tailwinds Thanks to HBM

Below you’ll find the key points from this discussion with 24/7 Wall Street Analysts Eric Bleeker and Austin Smith.

• High Bandwidth Memory, or HBM, has become a central technology enabling artificial intelligence.
• HBM is important because it gives GPUs high-speed access to DRAM you can stack in layers that might be 8 stacks high or even 12 stacks.
• There are three players in this market
  • SK Hynix – which offers somewhat of a pure play, but is primarily listed in Korea and on the Luxembourg Stock Market which makes purchasing shares challenging.
  • Samsung – Which is such a large and diversified business it offers less exposure.
  • Micron – Which is an American company and could continue picking up market share in the year ahead.
• A single look at Micron’s stock chart would lead most seasoned semiconductor investors to stay away/ DRAM has historically been a commodity with boom and bust cycles, and the company is up 90% in the past year.
• But, the dynamics around this cycle memory cycle could be far more profitable than investors currently expect.
• First, HBM inventories are sold out through 2025 for both Micron and SK Hynix. If AI demand stays high it’s going to be a long game of catch up getting enough inventory online.
• And with pre-orders of NVIDIA’s Blackwell appearing to be off to a strong start, that’s additional upward pricing pressure across HBM and DRAM. There is already evidence that memory makers needing to prioritize investment in HBM is leading to more favorable DRAM pricing, and that will be another catalyst in near-term results.
• Why does all this matter? Micron is reportedly taking its capital spending up to $8 billion this year, which is an increase from prior forecasts.
• This is a signal they’re investing more in leading-edge EUV to get more share of the booming HBM market. And while SK Hynix has been NVIDIA’s main supplier, they have every incentive to diversify, which benefits Micron.
• Overall, the massive growth in HBM will benefit Micron, but another winner is ASML (Nasdaq: ASML), which gets a powerful catalyst on the memory side.

 Full Transcript

Eric, artificial intelligence, we’re back.

There are so many acronyms and technologies and things to learn about this new industry.

There are chips used for training models.

There’s inference.

There are so many inputs.

One of the most important ones that not a lot of people are talking about is high bandwidth memory.

What is high bandwidth memory and why is it so important to the artificial intelligence trend we’re seeing right now?

Yeah, and people are looking for what are the big growth areas that are going to take off because we saw GPUs from NVIDIA take off.

We all know the profits that that’s created for NVIDIA shareholders.

People are asking, what are the next markets that are going to see huge growth?

One of the key ones is high bandwidth memory.

It is a central technology that’s really enabling artificial intelligence.

So what is HBM as we call it?

It gets GPUs high-speed access to DRAM.

You can stack in layers.

It might be eight stacks or even 12 stacks high.

And what’s interesting is there are only really three players in this market.

One is named SK Hynix, and it’s somewhat of a pure play into the trend, but the problem is it’s only listed on the Korean and Luxembourg stock markets, which makes purchasing shares pretty challenging.

There’s Samsung, we all know Samsung, the problem with that company is it’s very big, so getting exposure is difficult.

And there’s Micron, which is an American company.

A single look at Micron’s stock chart would lead most seasoned semiconductor investors to stay away.

It’s making DRAM, it’s got boom, and it’s got bust cycles.

And with a company of 90% a year, you might say, hey, they’re at the tail end of a boom cycle.

That’s not where I want to invest.

But along comes HBM, which could be a godsend to Micron investors.

So first of all, HBM inventories are sold out through 2025 for both Micron and SK Hynix.

And with sales of NVIDIA’s Blackwell, which is their next-generation chip platform, that’s an additional pricing pressure across not only HBM inventories.

But we look at NVIDIA with their GB200, basically, these huge servers they’re selling that cost upwards of $3 million.

They are projecting incredible volume on that. So that leads these memory makers to prioritize high-bandwidth memory.

Which also is leading to more favorable pricing conditions in DRAM, which is where these companies still make a majority of their revenue today.

So why does this all matter?

Well, Micron is reportedly taking its capital spending up to $8 billion this year, which is a good increase.

And that’s a signal they’re investing more into the leading edge, which would also, if you’re an investor, mean more EUV machines, from a company like ASML.

So while SK Hynix has been NVIDIA’s main supplier of HBM so far, Micron is also getting on this party.

I think that this is a great market to look at.

And while Micron shares are up, there are catalysts that are going to continue being a tailwind for the stock in the year to come.

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