Artificial Intelligence (AI) servers are poised to become a $187 billion industry by 2024, driven by the unprecedented demand for infrastructure capable of training AI models and deploying them in real-world applications. As cloud service providers continue to invest heavily in AI servers, investors have a unique opportunity to capitalize on this booming market.
Among the myriad of companies benefiting from the AI server market, Micron Technology and Marvell Technology stand out as key players in providing critical components for AI servers. Let’s delve deeper into the prospects of these two companies and explore why they are poised for impressive growth.
Micron Technology: Meeting the Demand for High-bandwidth Memory Chips
Micron Technology has seen a surge in demand for its high-bandwidth memory (HBM) chips, particularly in AI server chips like GPUs. HBM’s ability to facilitate faster data transfer, reduce processing times, and enhance performance has led to a significant increase in demand. Micron’s latest HBM3E chip, set to be produced in 2025, boasts superior power efficiency and increased capacity compared to rival offerings.
With Micron’s strategic focus on capturing a larger share of the HBM market, the company is projected to achieve impressive revenue growth. Reports indicate that Micron aims to secure 20-25% of the HBM market by next year, translating to substantial revenue potential. Analysts forecast Micron’s revenue to skyrocket by 52% to $38 billion in the current fiscal year, with earnings expected to reach $8.94 per share.
Investing in Micron Technology offers investors a compelling opportunity to benefit from the expanding AI server landscape. With a low forward earnings multiple of 11 and a favorable price/earnings-to-growth ratio, Micron’s stock is undervalued relative to its projected growth trajectory.
Marvell Technology: Leveraging Custom AI Chips for Growth
Marvell Technology specializes in manufacturing application-specific integrated circuits (ASICs), custom chips tailored for specific tasks. The growing demand for ASICs in AI servers, driven by major cloud service providers’ initiatives to develop in-house processors, presents a lucrative opportunity for Marvell.
As ASICs are poised to account for 26% of the AI server chip market in 2024, Marvell is strategically positioned to capitalize on this trend. The company’s data center revenue surged by 92% year-over-year in the second quarter of fiscal 2025, signaling strong growth potential in the AI chip segment.
Marvell’s CEO, Matt Murphy, highlighted the company’s AI custom silicon programs, with new chips entering volume production. Anticipating accelerated growth in the data center business, Marvell projects robust revenue figures, signaling a positive trajectory for the company.
Analysts project Marvell’s earnings to grow at a compound annual rate of 21% over the next five years, underscoring the company’s potential for substantial growth in the custom AI chip market. Investors seeking exposure to the burgeoning demand for custom AI chips can consider adding Marvell Technology to their investment portfolios.
For investors looking to tap into the thriving AI server market, Micron Technology and Marvell Technology present compelling investment opportunities. As these companies pave the way for innovative solutions in AI servers, savvy investors can position themselves for substantial returns in this dynamic sector.
Reminder: Investing in stocks involves risks, and individuals should conduct thorough research or consult a financial advisor before making investment decisions.
