Citi expects there to be strong growth in the future for memory chip manufacturers, driven by increased demand for artificial intelligence applications. The Wall Street bank estimates that specialized memory and storage products dedicated to AI chips will capture a larger share of the total market, reducing volatility in the sector. Inventory levels of memory chips, such as generic DRAMs, reached multi-year highs in the first quarter of 2023. These high inventory levels typically reduce manufacturers’ pricing power. Citi estimates that inventories have finally reached their lowest levels after falling by a third since the beginning of last year. The investment bank now expects chip manufacturing companies’ profits to rise as the market recovers and diversifies to produce more advanced and complex chips for artificial intelligence applications. “We expect memory products to become semi-customized as AI memory products drive increased product diversity and complexity in the future,” Citi analysts led by Peter Li said in a note to clients on Jan. 1. “It will likely evolve in the direction of further product optimization in order to meet customer needs, similar to the foundry market.” Citi told investors that the stocks listed below will benefit from this trend. Two specialized memory chips, high-bandwidth memory (HBM) and storage DIMMs, will be adopted MRDIMM is widely used thanks to its suitability for AI applications, according to Citi. HBM provides more bandwidth to accelerate parallel computing, while MRDIMM supports expanded memory capacity. Citi expects these chips to grow from 3.8% of total DRAM shipments in in 2024 to 8.8% in 2027. Both SK Hynix and Micron are likely to benefit from growth in “semi-custom” memory chips, according to Citi. The investment bank expects shares of SK Hynix and Micron Technology to rise 63% and 11%, respectively, during The next 12 months.AI processing is also moving beyond centralized server farms to consumer devices like computers and mobile phones.Citi expects new memory chips to emerge to enable on-device AI, offering low power draw and high bandwidth. Dell is also one of the most “active” companies in developing next-generation memory chips for thin laptops called “push-attached memory module.” Citi expects the PC maker’s shares to rise 9.8% to $84 over the next 12 months, supported by this trend.