DRAM and NAND shipments surge over 370%! Wells Fargo says rising AI infrastructure costs are not an alarm, the semiconductor boom cycle continues

According to information from Zhihu Finance APP, Wells Fargo cited data from the Semiconductor Industry Association (SIA) in its report, stating that memory chips have become the core driving force behind this round of high growth in the industry. Data shows that in June, total semiconductor shipments increased 134% year-on-year, reaching $151.9 billion. Excluding the memory chip category, semiconductor shipments grew 38% year-on-year, reaching $63.5 billion, compared to a 34% increase in May.

The analyst team led by Aaron Rakers noted that shipments of dynamic random-access memory (DRAM) in June increased 373% year-on-year, reaching $56.8 billion, with growth rates of 386% and 350% in April and May, respectively. In June, bit shipments increased 26% year-on-year, while the year-on-year growth in April and May was 58% and 27%, respectively.

Another core memory category, NAND flash, also maintained explosive growth, with a 377% year-on-year increase in June, reaching approximately $30.7 billion. The year-on-year growth rates for April and May were 351% and 376%, respectively. However, June’s bit shipments only increased 2% year-on-year, further confirming that the high growth in the memory industry this round is being driven by chip price increases rather than shipment expansion, and the supply-demand shortage in memory chips continues.

In June, analog chip shipments increased 22% year-on-year, reaching $8.42 billion.

The robust data further validates the demand support and resilience of the semiconductor sector.

Memory leaders collectively pull back after earnings amid industry boom

Benefiting from continued scaling up of AI computing power infrastructure, high-end memory chips are in global short supply and prices have risen sharply, making the memory segment one of Wall Street’s hottest investment tracks this year.

However, amid strong industry sentiment, the memory sector has recently seen a pullback. On Thursday, SanDisk (SNDK.US) and Western Digital (WDC.US) saw sharp drops in their stock prices following earnings, leading to a broader sector adjustment.

This reaction highlights the very high expectations the market holds for AI hot stocks; despite these companies reporting astonishing growth, they still fail to meet the most optimistic investor expectations.

Divya Mathur, portfolio manager at ClearBridge Investments, commented, “The recent volatility in semiconductor stocks doesn’t appear to reflect any material changes in long-term fundamentals. While investors may be reassessing their expectations and risk preferences, short-term stock price reactions tend to be more dramatic than what fundamental outlooks would suggest.”

Wells Fargo’s judgment: Rising AI infrastructure costs are not a warning sign

Addressing market concerns about rising AI costs, Wells Fargo gave a clear optimistic assessment, stating that higher AI infrastructure costs are not a warning sign.

Wells Fargo analyst Ken Gawrelski published a report earlier, noting that although AI infrastructure construction costs continue to rise, leading cloud service providers have enough pricing power to pass increased costs on to enterprise clients. Even with accelerating capital expenditure in the AI sector, these providers are still able to maintain considerable investment returns.

The research report mentioned that price increases for memory chips and next-generation chips will push the capital expenditure per gigawatt of AI computing power 22% above prior institutional estimates. However, strong pricing power among top cloud vendors can effectively offset the pressure from rising costs and ensure stable profitability.

Wells Fargo estimates that by 2027, the AI infrastructure capital expenditures of the four major cloud service providers will reach $1.1 trillion, 23% higher than the general market expectation.