Micron management's comments are bullish for these 3 chip stocks: analyst

Investing.com -- Rosenblatt told investors in a note on Monday that Micron’s latest earnings and guidance have reinvigorated the AI trade, with management commentary pointing to improving conditions across the semiconductor supply chain and positive read-throughs for several stocks under its coverage.

Rosenblatt analyst Kevin Cassidy said Micron’s results reinforce the firm’s long-held view that “DRAM are an essential component to AI systems and that limited supply will result in shortages.”

He added that “healthy demand across all markets despite with increasing prices is evidence of DRAM’s importance,” prompting Rosenblatt to highlight derivative opportunities tied to Micron’s outlook.

Rosenblatt believes one of the most notable takeaways was Micron management’s update on servers, noting that “server unit volume shipments expectations are now high teens percent Y/Y from 10% last quarter,” with this strength “expected to continue in 2026.”

The firm highlighted margin expansion, with Micron reporting Core Data Center gross margin rising to 51% from 41% quarter on quarter, while Mobile and Client margins increased to 54% from 36%.

Given the positives, Rosenblatt highlighted three stocks that it believes stand to benefit.

Cassidy feels the uplift in server volumes is “most positive for RMBS,” adding that Micron’s comments “suggest a strong uptick in demand” and that longer DRAM lead times should give Rambus “very strong visibility to demand through 2026.”

The firm also sees benefits for AMD, noting that the chipmaker “has been steadily gaining server CPU market share from Intel,” a trend Rosenblatt believes can extend through 2026.

"The strong server unit shipments confirm AMD’s recent comments of server CPU TAM doubling to $60B by 2030 and setting expectations for 50% market share from 40% today," said Cassidy.

Finally, Rosenblatt believes Penguin Solutions stands to gain, as stronger demand, higher prices and improved visibility are “all positive for Penguin’s business model,” with higher profit dollars outweighing pressure on margin percentages.

"Penguin has supplied custom memory modules to customers since ~1986. We expect that the company’s world-class supply chain management can navigate through this upcycle successfully," the firm concluded.

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