Micron Technology Inc. (NASDAQ:MU) and SK Hynix Inc. (NASDAQ:SKHY) shares climbed in Thursday premarket trading as NVIDIA Corp.’s (NASDAQ:NVDA) earnings and growth outlook reinforced expectations for strong AI-driven memory demand and tight supply.
NVIDIA Outlook Highlights Memory Demand
Samsung Electronics Co. Ltd. (OTC:SSNLF), SK Hynix and Micron dominate the global semiconductor memory market across DRAM, NAND flash and high-bandwidth memory.
Samsung leads global production of DRAM and NAND flash, while SK Hynix holds a leading position in high-bandwidth memory for AI applications. Micron remains a major U.S. supplier of high-performance memory and storage products.
Former NVIDIA executive and GFT Ventures founding managing partner Jeff Herbst said AI computing and services demand continues to outstrip available supply across the memory industry.
Herbst Sees Tight Supply And Elevated Prices Persisting
Herbst, who serves on SK Hynix’s CEO Advisory Board, told CNBC that the three major memory manufacturers are operating at capacity.
He said manufacturers cannot quickly add supply because new fabrication plants take several years to bring online. Herbst therefore expects elevated memory prices to persist as AI demand continues to grow.
He also highlighted SK Hynix’s early investment in high-bandwidth memory and noted that the company has indicated its supply remains sold out for at least a couple of years.
NVIDIA Secures Long-Term Memory Supply
Herbst said NVIDIA has locked in long-term supply agreements with all three major memory manufacturers, including SK Hynix.
He expects memory demand to continue increasing and believes suppliers will use profits from the current cycle to expand manufacturing capacity.
Herbst also views memory as a major constraint on NVIDIA’s growth. He said NVIDIA’s outlook for roughly 70% growth next year suggests supply limitations are restricting how quickly the company can expand.
NVIDIA did not identify memory as its only constraint, but Herbst said memory appears to be a key bottleneck alongside power, water and land availability.
Price Action: NVIDIA shares were up 6.00% at $222.25, Micron Technology shares were up 3.78% at $973.91 and SK hynix shares were up 4.10% at $164.50 during premarket trading on Thursday, according to Benzinga Pro data.
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