Bank of America analysts have named Marvell (MRVL), Micron (MU), and AMD (AMD) as AI plays that could benefit from the rising tide in the sector. Micron saw its price target raised on the growth potential of HBM or high bandwidth memory products.

Yahoo Finance Anchors Josh Lipton and Julie Hyman discuss the latest call from Bank of America and the broader demand for HBM products.

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Editor's note: This article was written by Nicholas Jacobino

Video Transcript

JOSH LIPTON: I'm watching a few chipmakers here-- Marvell Micron, and AMD. Team at Bank of America says the three companies could benefit from that rising AI tide. Micron, by the way, was especially interesting. BofA's price target on the memory maker goes up to 144.

They see strong growth potential for HBM, that is high bandwidth memory products, basically in layman's terms, this is super high speed memory that sits on a data center GPU. Very fast, low latency, critical to AI. Team at BofA expects demand for HBM to grow at a 48% CAGR between 23 and 27. And for Micron, they think to expand its share to the mid 20% range versus 5%. Currently helping. They tell their clients drive record overall company, sort of.

JULIE HYMAN: Something that we've talked about before when it comes to the chip industry and in particular, memory chip makers like Micron, very cyclical business. What happens is a new memory chip cycle starts, the memory chip makers produce like crazy, and then end up with too much.

Now, what Bank of America is saying that this time could indeed be different because of those high bandwidth memory chips because of the huge demand that is required for them because of AI. So that's what's interesting here and kind of the point of differentiation.

One other stories, by the way, that caught our eye today is a report in the Information, which is a tech news source that says the Microsoft and OpenAI are planning to invest as much as $100 billion in a data center that will run AI software. Now, this is just a staggering amount of money if it does indeed prove to be the case. And it's one of the other things that is fueling some of these chip making gains today.

JOSH LIPTON: Well, listen, if it was true, it makes sense that the chip investors would be very interested because just the mess of GPUs and memory chips and servers you would need but that would be a truly remarkable number if that's true. Just to put that in context, Barron's pointing out that would be Microsoft's total capital spending over the past four years combined, was about $104 billion. So just to put that number in perspective. We'll see.

JULIE HYMAN: Yes, we will see. We'll keep on that.