Driven by the AI boom, the “trillion-dollar market value club” is rapidly expanding. This week, two new trillion-dollar market value companies have been added globally. On Wednesday, the stock price of South Korea‘s semiconductor giant SK Hynix rose 9.3%, reaching a record 1,599 trillion won (approximately 1.06 trillion dollars) in market value, which also means that the company became the second South Korean company with a trillion-dollar market value after Samsung. On Tuesday, the stock price of US chip giant Micron Technology soared 19%, successfully joining the “trillion-dollar market value club”. And South Korea‘s technology giant Samsung Electronics joined the “trillion-dollar market value club” only earlier this month.
It‘s worth mentioning that the three new members of the “billion-dollar market value club” – Samsung Electronics, SK Hynix and Micron Technologies – are all memory chip manufacturers. The U.S. Wall Street Journal said that memory chips are like the “fuel pipeline” of computing engines. Today, AI processors produced by companies such as Invidia are becoming increasingly powerful, and their demand for memory is also becoming higher, especially requiring advanced high-bandwidth memory. As global AI infrastructure construction continues to advance, the supply of high-performance computing chips will further tighten, and the price of memory products will continue to rise, from which related chip manufacturers will benefit. Reuters said that memory chip manufacturers are entering the “billion-dollar market value club” one after another, signaling that the memory chip industry has achieved a strong recovery in the post-pandemic era. Not long ago, the demand for personal computers and smartphones continued to decline due to high inflation, and memory chip manufacturers such as Samsung, SK Hynix, and Micron Technologies were once in deep supply oversupply.
Kim Yong-kyon, an analyst at Korea‘s Future Assets Securities, is optimistic about the stock price trend of memory chip manufacturers. He believes that the shortage of two major types of memory products, DRAM and NAND, will continue until 2028, and the average sales prices of SK Hynix‘s DRAM and NAND products are expected to soar 184% and 231% this year, respectively, so he raised his target stock price expectations for SK Hynix to 3.8 million won per share. UBS analyst Timothy Akouri raised his 12-month target stock price for Micron Technology to $1,625 per share, while also raising his revenue and profit expectations for the firm from 2027 to 2029.
However, the current boom in AI investment also raises concerns. Reuters said that the current AI-related capital expenditure fever has exceeded the madness of the late 20th century and early 21st century Internet bubble periods. Morgan Stanley believes that this year‘s AI-related capital expenditure could reach $800 billion, setting a record for the largest scale of capital expenditure in history; next year AI capital expenditure could continue to increase by 17% to $1.12 trillion. The aforementioned huge expenditures are rapidly erasing the vast amounts of cash currently in the hands of U.S. technology giants, and over the next two years, up to 94% of the cash flows in the hands of technology giants may all be directed toward AI expenditure. At the same time, to meet the demand for AI investment, technology giants are also increasing their borrowing, their new debt volume since this year has reached $135 billion, exceeding the level of the entire previous year. If AI demand cannot keep up with the rapidly increasing supply of AI services in the coming years, then even if AI can change the world, it may also have problems.