Jim Cramer names 4 'indispensable' memory stocks he says investors 'can't afford' to skip as AI demand soars
Jim Cramer of Mad Money has named four memory stocks that investors cannot afford to overlook in light of soaring AI demand. These indispensable memory stocks are Seagate, Western Digital, Micron, and Sandisk. Cramer asserts that these companies are worth investing in, even at high prices, due to the current momentum.
Cramer clarifies that he is not an early investor in memory chip stocks, but acknowledges that AI is driving the current surge. He emphasizes that memory stocks have historically boomed and busted cyclically due to the high upfront costs of producing memory chips. Once a company starts manufacturing memory chips, it is generally worth continuing until memory prices drop significantly.
The AI boom is leading to unprecedented construction of data centers, which require computer memory for operation. If combined data center and consumer demand for chips outpaces the memory companies' ability to produce them, memory stock prices could keep rising past their usual downturns. However, this situation cannot persist indefinitely, as data center construction and consumer demand will eventually reach a saturation point, causing memory chip supply to surpass demand once more.
The success of memory companies depends on the duration of the data center-driven boost. Concerns over data centers' impact on local communities, such as increased electricity and water consumption, have led to growing opposition from politicians and local residents. Over 25 states have enacted or are considering legislation to regulate or discourage data center creation. Even Senator Bernie Sanders has introduced a bill proposing an indefinite moratorium on new data center construction.
If politicians and local communities succeed in limiting data center development or if the market no longer rewards new AI infrastructure, memory chip manufacturers may overproduce chips, leading to a flood of chips in the market and causing stock prices to decline.
Written by urgent.news from Yahoo Finance's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
