Best AI Stocks to Buy Now as Leadership Expands to Memory

Morgan Stanley has identified six key AI stocks for investors, signaling a strategic shift in AI investment leadership towards commodity memory segments, with AI semiconductor growth projected at a 22-55% CAGR through 2030. The firm's top picks—SanDisk, ASML, SK Hynix, Samsung Electronics, Kioxia Holdings, and KLA Corporation—are highlighted for their strong positioning in the expanding AI ecosystem, driven by memory exposure, technological advancements in HBM and NAND, and strategic market roles. This analysis underscores the increasing importance of memory manufacturers in capturing value within the evolving AI landscape.

Analysis

A Morgan Stanley research note highlights a strategic shift in the artificial intelligence investment landscape, with value projected to move from hardware to applications and leadership expanding into commodity memory segments. The bank forecasts a robust 22-55% compound annual growth rate for AI semiconductors through 2030, underscoring the sector's potential. The firm identifies six key beneficiaries, led by Samsung Electronics as a top pick due to its turnaround potential and recent progress in passing Nvidia’s qualification for its 12-layer HBM3E product. In the U.S. memory space, SanDisk Corporation is named a top pick, with a stated preference for its NAND technology, which is expected to benefit from AI applications and new export regulations. ASML Holding receives an Overweight rating, attributable to its significant memory exposure (39% of 2024 revenue) and a €1.3 billion investment in Mistral AI. Similarly, KLA Corporation is rated Overweight and identified as a major beneficiary of TSMC's investments, supported by a recent earnings report showing revenue of $3.18 billion and non-GAAP EPS of $9.38, both surpassing estimates. In Asia, SK Hynix is favored with an Overweight rating as HBM downside risks are considered priced-in, and Kioxia Holdings is designated a Japan Top Pick, described as an 'idiosyncratic re-rating opportunity' driven by its advanced BiCS-8 technology and a planned dollar bond sale.

Key Decisions for Investors

• Investors should consider increasing exposure to the semiconductor memory sector, as analysis indicates a structural shift where memory manufacturers are poised to capture significant value from the expanding AI ecosystem.
• Evaluate specific technology plays within memory, such as SanDisk's strong position in the NAND market and the advancing HBM capabilities of Samsung and SK Hynix, to align with different risk profiles and growth theses.
• Monitor key company-specific catalysts, including Samsung's HBM qualification progress with Nvidia, KLA Corp's continued earnings performance, and the execution of Kioxia's planned bond sale, as these are likely drivers of share performance.
• Consider positions in key equipment and process control suppliers like ASML and KLA, which are positioned as primary beneficiaries of increased capital expenditure and technological complexity within the memory industry.