The AI Inference Supercycle: A Deep Dive into the Memory Makers
The AI inference supercycle is here, and it's set to be a game-changer for the memory chip industry. While the spotlight has been on the training phase of AI models, the inference phase is now gaining significant traction, and it's set to drive a massive surge in memory demand. This shift is particularly exciting for memory manufacturers like Micron Technology (NASDAQ: MU) and Sandisk (NASDAQ: SNDK), and I'm here to explain why.
In my opinion, the inference phase is like the real-world application of AI models, where the training phase is akin to preparing for an exam. The inference phase requires faster data movement between the processor and storage, which is where memory chips come into play. As AI workloads extend from training to large-scale inferencing, data generation is at an inflection point, and memory becomes a key factor in ensuring that trained models respond quickly to requests.
What makes this particularly fascinating is the fact that the inference phase requires less computing power than the training phase, but it can generate a massive increase in the number of inference requests as consumers and enterprises use AI applications to unlock productivity gains. This means that memory demand will skyrocket, and memory manufacturers will be the biggest winners of this megatrend.
One thing that immediately stands out is the fact that chip designers like Broadcom and Intel have been witnessing healthy demand for their inference-focused AI processors. However, both these chipmakers rely on memory chips to ensure that their data center accelerators perform to their full potential. This is where Micron and Sandisk come in, as they are in the business of manufacturing storage and compute memory.
The AI-fueled demand for memory chips has created a severe supply shortage, and memory industry participants are warning that there may not be enough supply to meet demand, at least until next year. This is likely to lead to further price hikes in DRAM and NAND flash, and Gartner is predicting a 2.9x increase in the memory industry's revenue to $633.3 billion in 2026. Given that memory shortages could last until the end of the decade due to AI-fueled demand from data centers, PCs, and smartphones, the favorable environment that's powering incredible growth at Sandisk and Micron should continue.
What many people don't realize is that Micron manufactures both compute-oriented dynamic random-access memory (DRAM) and storage-focused NAND flash, while Sandisk is a pure-play flash storage manufacturer. This means that both companies are well-positioned to benefit from the AI inference supercycle, and their impressive stock market rally could be long-lasting.
From my perspective, the inference phase is a critical component of the AI ecosystem, and it's set to drive a massive surge in memory demand. As AI workloads extend from training to large-scale inferencing, data generation is at an inflection point, and memory becomes a key factor in ensuring that trained models respond quickly to requests. This is why I believe that Micron and Sandisk are the biggest winners of the AI inference era, and their stock market rally could be long-lasting.
In conclusion, the AI inference supercycle is here, and it's set to be a game-changer for the memory chip industry. Memory manufacturers like Micron and Sandisk are well-positioned to benefit from this megatrend, and their stock market rally could be long-lasting. If you're looking for a lucrative opportunity in the AI inference space, buying these two stocks is a no-brainer right now, given their attractive valuations and the eye-popping earnings growth rates they're on track to deliver.
