This Artificial Intelligence (AI) Stock Is About to Go on a Bull Run

The PHLX Semiconductor Sector index is off to a strong start in 2024 with gains of 11% so far. That’s not surprising as some of its key components such as Nvidia (NASDAQ: NVDA), AMD, Broadcom, and Taiwan Semiconductor Manufacturing have already jumped nicely thanks to their solid earnings reports — which have revealed that these companies are benefiting from the growing adoption of artificial intelligence (AI) chips.

However, there’s one PHLX Semiconductor Sector component that has failed to step on the gas thus far: Micron Technology (NASDAQ: MU). Shares of the memory manufacturer are up just 5% in 2024. However, a recent development has given Micron stock a nice boost. Shares of the chipmaker jumped 4% on Feb. 26.

Let’s see why that happened and check why this semiconductor stock could go on a bull run following this development.

Supplying chips for Nvidia’s next-gen AI GPU

In a press release dated Feb. 26, Micron pointed out that it has commenced the volume production of its high bandwidth memory 3E (HBM3E) chip. The company added that this particular chip “will be part of NVIDIA H200 Tensor Core GPUs, which will begin shipping in the second calendar quarter of 2024.” Micron claims that HBM3E consumes 30% less power than what competitors offer.

It is not surprising to see Micron landing the HBM spot in Nvidia’s upcoming processors. In its December 2023 earnings conference call, Micron pointed out that its HBM3E chip was in the final stages of qualification with Nvidia. Now that the company has won this business from Nvidia, it seems on its way to achieving its target of generating “several hundred millions of dollars of HBM revenue in fiscal 2024.”

The good thing for Micron is that demand for Nvidia’s upcoming H200 processors is already solid. Nvidia management remarked on its latest earnings call that demand for its next-generation products will be greater than supply. So the possibility of Micron selling out its entire output of HBM3E chips cannot be ruled out,…