Micron Stock Is Riding the AI Wave. A Rival’s Sales Surge Is Good News.

Micron is the third largest player in the high-bandwidth memory chip market. (Photo by HECTOR RETAMAL/AFP via Getty Images)

SK Hynix is confident the boom in high-bandwidth memory chips is set to continue. That is good news not only for the South Korean company, but should also bolster its U.S. rival Micron Technology .

SK Hynix reiterated a forecast that its sales of high-bandwidth memory will double in 2025 when it reported its earnings overnight. HBM chips are a crucial component of the latest artificial-intelligence processors made by the likes of Nvidia.

SK Hynix is the current leader in HBM chips. It has a market share of close to 50%, according to research firm TrendForce, followed closely by Samsung Electronics . But Micron is in position for a 20% to 25% share of the HBM market by the end of this year, according to analysts at BofA Global Research.

Micron is likely to take market share from Samsung, which has suffered delays in meeting the requirements to supply HBM chips to Nvidia.

The question that has dogged Micron’s stock is whether growth in HBM chips can offset any weakness in DRAM—dynamic random-access memory—or NAND chips for use in personal computers, mobile phones, and data centers. The stock flatlined even after Micron reported better earnings than expected last month.

SK Hynix might have good news about those markets as well. It said DRAM and NAND shipments were higher than expected as it reported a 70% rise in net profit and a 35% increase in revenue for the second quarter.

“We see Micron still well positioned in the AI race with its growing HBM share and strong AI Datacenter exposure,” wrote Mizuho Securities analyst Vijay Rakesh in a recent research note. “We see Micron adding HBM capacity in C25/26E as AI continues to ramp, benefiting from positive pricing in HBM/leading edge DRAM.”

Rakesh reiterated an Outperform rating and $150 target price on Micron stock. Micron shares were up 1.5% at $111.46 in early trading on Thursday. The stock is down 14% over the past month but has still gained 51% over three months.

Write to Adam Clark at adam.clark@barrons.com