GoKawiilA Samsung Electronics Co. CXL memory module displayed on a monitor during the Semiconductor Exhibition (SEDEX) in Seoul, South Korea, on Wednesday, Oct. 23, 2024.
Semiconductor stocks rallied to start the year, led by the world's biggest memory chip firms that are getting a boost from continued artificial intelligence-related demand.
South Korea's SK Hynix and Samsung Electronics, the world's two biggest memory makers, are up 11.5% and 15.9% respectively year-to-date. Micron is 9% higher this year.
Memory is a core component of the type of chips required to train and run AI models such as those designed by Nvidia and AMD . As tech giants continue to spend billions of dollars buying those chips and building out AI data centers, memory is in short supply.
In particular, a specific component called dynamic random-access memory or DRAM, which is used in AI data centers, saw a huge price spike in 2025. Memory prices are expected to rise another 40% through the second quarter of 2026, according to Counterpoint Research.
"The recent rally across the semiconductor space has been driven largely by the memory side of the market rather than logic chips," Ben Barringer, head of technology research at Quilter Cheviot, told CNBC by email.
"We're seeing a combination of very strong demand from AI workloads and relatively constrained supply, particularly in high-bandwidth memory, which is essential for training and running large AI models."
This is seen as positive for Samsung, SK Hynix, and Micron as they are expected to be in a position to charge a higher price for their memory chips as demand shows no sign of abating. Investor sentiment is positive on these names as they prepare to report their fourth-quarter earnings in the coming week, with analysts expecting a huge profit surge.
Samsung is seen reporting a 140% jump in fourth-quarter operating profit, according to LSEG estimates. Meanwhile, Micron's earnings per share are expected to rise more than 400% year-on-year in the December quarter.