The world of artificial intelligence is undergoing a significant transformation, and the focus is shifting from training to inference. This shift is creating a new era, and I believe it's time to highlight the unsung heroes of this AI revolution: memory manufacturers.
The AI Inference Supercycle: A New Era
While the training phase of AI models has dominated the market, the inference stage is now taking center stage. Inference is where the real-world applications of AI come to life, and it's a crucial step that often goes unnoticed. Think of it as the practical exam after all the studying - it's where the rubber meets the road.
The Rise of Inference Workloads
Inference workloads are gaining traction, and this shift is creating a demand for more compute power and storage. As AI applications become more prevalent, the number of inference requests will skyrocket. This is especially true as inference moves beyond data centers and into edge devices like smartphones, PCs, and even cars. The need for quick responses and efficient data processing is paramount.
The Role of Memory: A Key Factor
Memory becomes a critical factor in ensuring that trained AI models can respond swiftly to requests. The inference phase requires faster data movement between the processor and storage. This is why we're seeing an increase in high-bandwidth memory (HBM) integration in AI-focused chips. It's all about reducing bottlenecks and ensuring smooth performance.
The Winners: Micron Technology and Sandisk
This is where Micron Technology and Sandisk come into the picture. These companies are the unsung heroes of the AI inference era. They are the manufacturers of storage and compute memory, and their products are in high demand due to the shift towards inference workloads.
Micron, with its dynamic random-access memory (DRAM) and NAND flash, and Sandisk, a pure-play flash storage manufacturer, are perfectly positioned to capitalize on this trend. Their stocks have already seen impressive gains, but the best may be yet to come.
A Long-Lasting Rally
The memory demand created by AI inference is causing a severe supply shortage. Industry experts warn that this shortage could persist until the end of the decade, driven by AI-fueled demand from data centers, PCs, and smartphones. This environment is a boon for Micron and Sandisk, and their growth is expected to sustain beyond next year.
The earnings growth for both companies is anticipated to be stellar, and their valuations are attractive, especially when compared to the broader market. With their eye-popping growth rates, these stocks deserve a premium valuation.
A No-Brainer Investment
In my opinion, investing in Micron and Sandisk is a no-brainer. The AI inference space is a lucrative opportunity, and these companies are well-positioned to capitalize on it. With their strong growth prospects and attractive valuations, they are a compelling choice for investors looking to tap into the AI revolution.
So, as we witness this shift towards AI inference, let's not forget the importance of memory manufacturers. They are the unsung heroes, powering the AI revolution from behind the scenes.
