Micron surge is bullish for these other stocks, says Bank of America

I started investing successful the 1990s and joined Wall Street connected the merchantability broadside successful 1997. One of the archetypal things my mentor taught maine was that "semiconductors are cyclical."

Like astir bully advice, I ignored it. And paid a stiff tuition learning for myself however semiconductor booms and busts interaction stocks, particularly memory-maker Micron, a institution peculiarly prone to eye-popping pops and drops successful bully and atrocious times.

I couldn't assistance but person my mentor's proposal ringing successful my ears erstwhile I work Bank of America's latest outlook for semiconductor stocks. The bank's analysts painted a rosy picture, suggesting an evolving supercycle that could beryllium a beardown tailwind for semiconductor instrumentality and manufacturing stocks, including those tied to representation superior expenditures arsenic Micron and rivals ramp spending to boost fab capacity.

The crushed down it each - artificial quality -- shouldn't astonishment you. Everyone has been genu heavy successful AI successful 2025, 1 mode oregon another. Companies are researching however to usage it to boost productivity and unlock insights from information siloes, and increasingly, mundane Americans are embracing it arsenic a much robust alternate to accepted search.

The flurry of involvement has sparked a golden unreserved of AI probe and development, straining existing infrastructure and underpinning pricing for semiconductor manufacturers.

Until recently, Nvidia has been the astir evident beneficiary, with its income soaring from $26.9 billion successful 2022, erstwhile ChatGPT was released, to an estimated $213.2 billion this year. Lately, though, it's Micron that's arguably seeing the astir important surge.

The institution reported that gross jumped 56% past 4th to $13.6 cardinal arsenic rocketing representation spot prices impacted declaration pricing. Micron's guidance, however, was adjacent much jaw-dropping. CEO Sanjay Mehrotra says Micron's income and nett volition leap to $18.7 cardinal and $8.42 per stock this 4th (it reported EPS of $4.78 past quarter).

Unsurprisingly, sky-high request is prompting Micron to action. Recently, it abandoned its user concern to displacement capableness to supplying representation for AI information centers. It besides plans to importantly boost its superior expenditures (capex) to summation accumulation capableness — thing Bank of America believes volition connection tailwinds for apical semiconductor instrumentality players, including Lam Research (LRCX), KLA Corp. (KLAC), and Applied Materials (AMAT).

“Training is importantly and progressively compute-intensive, but aboriginal LLM demands were manageable. Today, compute needs are accelerating rapidly, peculiarly arsenic much models determination into production,” wrote JP Morgan strategist Stephanie Aliaga in October. “Nvidia estimates that reasoning models answering challenging queries could necessitate implicit 100 times much compute compared to single-shot inference.”