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Missed out on NVDA, SMCI and AMD? This AI chip stock is seen as next big winner

Published 03/20/2024, 10:40 AM
© Reuters
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The artificial intelligence (AI) boom has benefitted shareholders in several companies. For example, AI chip stocks such as NVIDIA Corporation (NASDAQ:NVDA) and Advanced Micro Devices Inc (NASDAQ:AMD) have surged, while Super Micro Computer Inc (NASDAQ:SMCI), which develops AI-optimized servers, has also rallied significantly.

However, for those that missed out on the rally in those names, could there be another that is the next big AI winner?

AI chip stock winners

As mentioned, NVIDIA and AMD were stocks that have gained based on the AI surge.

Nvidia, which is seen as the biggest winner, is up over 81% in 2024 and 249% over the last 12 months. Its gains have yet to let up, with Nvidia climbing over 20% in the last month, now trading around the $894 mark after hitting an intraday high of more than $973 in early March.

Meanwhile, AMD has had a harder time of late, but nonetheless, it has still rallied 25% this year and more than 88% over the last 12 months. Since hitting an intraday high of over $227 in early March, it has pulled back to around $182 per share.

On the other hand, SMCI has been the biggest winner when it comes to percentage gains. The company’s shares are up 225% for the year-to-date and 854% in the last 12 months. That is despite a more recent pullback to below $900 per share after an intraday high of $1,229 on March 8.

Micron (NASDAQ:MU) stock could be next says analyst

The rise in those AI-related stocks prompts the question of which name could be next. Analysts at Lynx equity strategists have an idea.

The firm said in a note that they “expect MU’s earnings event today to be a wake-up call highlighting the central role flash storage plays in the ongoing AI revolution.”

The firm explained it is calling out a trend that is “more than mere gradualism.”

“Sometime during the Feb quarter, we believe flash storage demand from AI data centers inflected sharply upwards resulting in a ratcheting up of MU’s NAND visibility, and consequently, fab utilization,” they wrote. “At the earnings call today, we expect a qualitative upgrade in the outlook of its NAND business, driven by all-flash storage arrays.”

Furthermore, Lynx feels the Street does not yet appreciate the fundamental role flash storage plays in AI data lake creation and AI training.

“In addition to the well-understood role of its DRAM/HBM in AI servers, if MU’s NAND business too were to become central to AI, we think MU could come to be perceived by investors less as a cyclical commodity play and increasingly as a secular pure play in AI,” they added.

“In our assessment, industry conditions are ripe for MU to revisit the glory days of the FY17/18 super-cycle,” declared the firm, adding that over the next 12 to 18 months, they think MU has the potential to emerge as a pure play in AI, second only to NVDA.

“We will be long into print and will add to position on weakness. We have a line of sight to PT $150 and a ~$150bn market cap,” they added. “And if the stars line up just right, MU could rival AMD’s market cap, which is currently running at ~$300+bn.”

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