NVIDIA's AI Mega-Deal Boosts Micron and Two Memory Stocks Analysts Are Recommending to Buy

According to TipRanks, NVIDIA (NVDA-US) fell 4.99% on Monday (27th), Broadcom (AVGO-US) rose 0.34%, while Samsung Electronics and SK Hynix dropped 7.47%. However, last week, several major AI collaboration agreements were announced at a summit hosted by the South Korean government. These agreements aim to secure long-term supply of advanced memory chips. Following the announcement, Bernstein analyst Mark Li reiterated his 'Outperform' rating on Micron (MU-US), Samsung Electronics, and SK Hynix, stating that these deals further support the strong outlook for memory stocks.

The largest agreement was between NVIDIA and SK Hynix, which signed a memorandum of understanding (MoU) valued at over $500 billion. The collaboration spans memory supply and AI infrastructure, including plans to build a 2GW Vera Rubin DSX AI factory for SK Telecom by 2027, as well as long-term supply of next-generation high-bandwidth memory (HBM).

Samsung Electronics also signed an MoU with Broadcom, with cooperation potentially reaching up to $200 billion by 2030. The collaboration includes HBM chips and advanced foundry services using 2-nanometer process technology.

Li noted that these deals indicate major AI firms are proactively securing memory supply ahead of further AI demand growth.

Why is Bernstein still bullish on memory stocks?

Bernstein believes memory has become one of the biggest bottlenecks limiting AI growth. While advanced AI chips receive most market attention, the firm emphasizes that without sufficient HBM supply, these chips cannot perform at full capacity.

This is why NVIDIA and Broadcom have opted for long-term supply agreements instead of relying on spot market purchases. Bernstein believes these partnerships will sustain strong demand for memory chips over the coming years.

The firm also stated that the recent pullback in memory stocks has created an attractive buying opportunity.

Wall Street also remains optimistic about these memory stocks. Micron has a 'Strong Buy' consensus rating, while Samsung Electronics and SK Hynix have a 'Moderate Buy' rating.

Among the three companies, Samsung Electronics has the highest potential upside at 136.96%, followed by SK Hynix at 113.5%, and Micron at 70.4%.