Semiconductor stocks have surged significantly since the start of the year, led by the world's largest memory chip companies, which are benefiting from sustained artificial intelligence-related demand. The world's two largest memory chip manufacturers—South Korea's SK Hynix and Samsung Electronics—have seen their share prices rise by 11.5% and 15.9% respectively so far this year. Micron Technology has gained 9% year-to-date. Memory is a core component of the chips required to train and run AI models designed by companies such as Nvidia and AMD. As tech giants continue to invest billions of dollars in procuring these chips and building AI data centers, a supply-demand imbalance has emerged for memory. A specific component used in AI data centers—Dynamic Random-Access Memory (DRAM)—is experiencing a significant price increase projected for 2025. According to Counterpoint Research, memory prices are expected to rise by an additional 40% before the second quarter of 2026. "The recent rally across the semiconductor space has been primarily driven by the memory market, rather than logic chips," Ben Barringer, Technology Research Lead at Quilter Cheviot, told CNBC via email. "We are seeing strong demand from AI workloads combined with relatively constrained supply, particularly in high-bandwidth memory, which is critical for training and running large AI models." This is viewed positively for Samsung, SK Hynix, and Micron, as they are positioned to increase memory chip prices with no signs of demand weakening. Investors are optimistic about these companies, which are set to report fourth-quarter earnings next week, with analysts forecasting a substantial surge in profits. According to LSEG forecasts, Samsung's fourth-quarter operating profit is expected to jump by 140%. Meanwhile, Micron's earnings per share for the December quarter are projected to increase by over 400% year-on-year.
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