Prediction: Not Micron. This Artificial Intelligence (AI) Stock Could Be the Biggest Winner of the Next Infrastructure Bottleneck
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Memory chip demand has been exceeding supply thanks to artificial intelligence (AI) data centers shifts into overdrive as midterms get closer”>data centers, and that’s not surprising, as memory helps solve a key bottleneck that can impede the performance of AI data center chips.
AI accelerators, such as graphics cards, server processors, and custom chips, are known for their fast processing speeds. As a result, they require quick access to huge amounts of data, and that’s made possible by integrating fast memory chips into AI accelerators. This is why Micron Technology has been experiencing phenomenal growth in demand for its high-bandwidth memory (HBM).
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The good news for Micron investors is that memory demand is expected to outstrip supply until the end of the decade. Citrini Research, a firm that provides insights on equity trading and macro trading, predicts that dynamic random-access memory (DRAM) demand could exceed supply by 25% in 2030. Micron stock, therefore, is likely to continue benefiting from an inflated memory pricing environment that could send its stock higher.
However, there is another emerging bottleneck within the AI infrastructure space that could be even bigger than memory chips — optical networking. Marvell Technology (NASDAQ:MRVL) is one of the best ways to capitalize on this boom. Let’s look at the reasons why.
Marvell Technology is the dominant player in a fast-growing optical niche
Goldman Sachsestimates that the optical networking market could grow from $15 billion this year to $154 billion in 2028. That’s a massive increase of over 10x in just two years. This stunning growth will be fueled by the need for rapid connectivity within AI data center clusters, creating demand for high-speed optical networks and Ethernet.
Specifically, the data center optical interconnect (DCI) market alone could clock a 48% annual growth rate between 2024 and 2030 The firm estimates that the DCI market size could grow from less than $14 billion in 2024 to over $144 billion in 2030
Marvell is in a terrific position to capitalize on this market’s growth. It reportedly controls 60% to 65% of the optical digital signal processor space. Not surprisingly, the company is experiencing robust growth in sales of its optical networking products. Marvell noted in May that its data center interconnect business is on track to grow by more than 70% in fiscal 2027, exceeding its original estimate of 50% growth.
