DRAM and NAND shipments surged by more than 370%! Wells Fargo says rising AI infrastructure costs are not an alarm; the semiconductor boom cycle continues

The Zhitong Finance App learned that Wells Fargo quoted the Semiconductor Industry Association (SIA) data release report as saying that memory chips have become the core driving force for the current round of industry growth. According to the data, total semiconductor shipments increased 134% year-on-year in June, reaching US$151.9 billion. Excluding the memory chip category, semiconductor shipments increased 38% year over year to reach US$63.5 billion, up 34% in May.

According to a team of analysts led by Aaron Rakers, dynamic random access memory (DRAM) shipments increased 373% year-on-year in June to reach $56.8 billion, compared to 386% and 350% in April and May, respectively. In June, bit shipments increased 26% year over year, while April and May increased 58% and 27% year over year, respectively.

Another core storage category, NAND flash memory, also continued its explosive growth trend. The year-on-year increase in June was 377%, reaching about US$30.7 billion, while the year-on-year growth rates in April and May were 351% and 376%, respectively. However, bit shipments in June increased 2% year on year, further confirming that this round of high growth in the storage industry was driven by increases in chip prices rather than expansion in shipment volume, and that the pattern of scarce supply and demand for memory chips continues.

Analog chip shipments increased 22% year-on-year in June, reaching US$8.42 billion.

The hot data further confirms the demand support for semiconductor circuits and the resilience of the industry.

Under the boom in the industry, leading storage companies made a collective correction after the performance of leading storage companies

Benefiting from the continued increase in AI computing power infrastructure, the global supply of high-end memory chips is in short supply and prices have risen sharply, and the storage sector has also become one of the most popular investment tracks on Wall Street this year.

However, against the backdrop of a boom in the industry, there has recently been a correction in the storage sector. On Thursday, SanDisk (SNDK.US) and Western Digital (WDC.US) stock prices fell sharply after the results, leading to a collective sector adjustment.

This reaction highlights the high expectations that the market has for popular AI stocks. Despite these companies' impressive growth in performance, they are still unable to meet investors' most optimistic expectations.

Divya Mathur, portfolio manager at ClearBridge Investments, said: “Recent fluctuations in semiconductor stocks do not appear to be related to any substantial changes in long-term fundamentals. Although investors may be re-evaluating expectations and risk appetite, the short-term reaction of stock prices will tend to be more drastic than the basic outlook suggests.”

Wells Fargo judgment: rising AI infrastructure costs are not a danger sign

In response to market concerns about rising AI costs, Wells Fargo made a clear and optimistic judgment, believing that rising AI infrastructure costs are not a dangerous sign.

Wells Fargo analyst Ken Gawrelski released a report earlier saying that although AI infrastructure construction costs continue to rise, leading cloud service providers have sufficient pricing power to pass on the rising costs to enterprise customers. Even if capital expenditure in the AI sector accelerates, they can still maintain a considerable return on investment.

The research report mentioned that the rise in the price of memory chips and next-generation chips will cause the capital expenditure corresponding to each gigawatt of AI computing power to be 22% higher than the agency's previous estimate. However, the strong pricing capabilities of leading cloud vendors can effectively hedge against the pressure brought about by rising costs and ensure profit stability.

Wells Fargo estimates AI infrastructure capital spending of the four largest cloud service providers will reach $1.1 trillion by 2027, 23% higher than generally anticipated.