Artificial intelligence spending continues to drive equity gains as investors look beyond hyperscalers and advanced processors for the next beneficiaries of the AI buildout. Memory chip companies are emerging as key winners as demand for computing power accelerates.
BNN Bloomberg spoke with Brian Mulberry, chief market strategist at Zacks Investment Management, about the growing importance of memory technology in AI infrastructure, expanding computing capacity and where he continues to see opportunities across the technology sector.
Key Takeaways
- Memory chip companies have become major beneficiaries of AI infrastructure spending as demand for data processing and storage capacity accelerates.
- Faster processor speeds are increasing the need for memory, creating significant demand growth across the semiconductor supply chain.
- Expanding manufacturing capacity will be critical as memory producers work to meet rising orders from AI-related customers.
- Computing capacity remains constrained, supporting continued investment in data centres and AI infrastructure.
- Strong free cash flow generation is helping memory companies finance growth without relying heavily on additional debt.
Read the full transcript below:
ROGER: And even with today, depending on where we end up, the markets continue to push higher. AI infrastructure serving as a major driver, while investors have spent the last few years focused on hyperscalers, cloud computing and advanced processors. Our next guest says some of the biggest winners this year have been memory chip companies. Joining us now to discuss the evolution of AI investment, and where he sees opportunities, is Brian Mulberry, chief market strategist at Zacks Investment Management. Brian, thanks very much for joining us.
BRIAN: Good morning.
ROGER: Just a quick reaction to the markets today. We have this news. It looks like everything’s falling apart in the Middle East, yet the markets really aren’t reacting right now, are they?
BRIAN: Yeah, oil is up on the day, and that certainly is creating some stress. You’re seeing it in some of the other sectors, like materials and industrials, where the fuel cost will certainly impact profits later on. But we’re not at maximum stress yet. We’re not back over $100 a barrel, so it’s kind of in between, if you will, which is the modest reaction that you’re finding in the market today.
ROGER: So AI still rules then, doesn’t it?
BRIAN: It does, especially what we’re seeing in the Nasdaq today. News-based that Nvidia’s new processor chip is going to end up in PCs, and that’s boosting both Dell and Microsoft. And that processor speed is actually one of the main reasons we wanted to talk about memory because, as processing speeds have jumped three times in the last year, memory capacity is only up one and a half times. And if you’re processing a lot of data very quickly, you still have to transfer it from one place to another, and that’s where that DRAM memory comes into place.
The new servers that are being designed today are using 12 times more chips in memory than they did before. They used to have eight memory chips per server. Now it’s 96. And so the growth that we’ve seen in this AI capex spending has just kind of had these rolling waves into different components, memory being the latest one. And it’s why you’re seeing things like SanDisk, Western Digital and Micron have these gigantic 200, 300, 400 per cent year-to-date returns because the demand for their product is up 12 times in a year-to-date period as well.
ROGER: And does that look like that’s going to ease, and can they meet that demand?
BRIAN: Well, processing speeds definitely continue to gain, so the demand for memory is absolutely going to grow as well. And I think that’s going to be the critical question: Can these manufacturers of memory meet that demand from a true production perspective?
And so, with 12 times more orders than what they had, they really do need to reinvest in some of their manufacturing capacity. It looks like they will, particularly SanDisk and Micron, have said that they will increase that production capacity to meet the need.
That’s good for overall computing power. Right, we’ve heard from a lot of companies in the technology sector, even the software names that were supposedly going to die. They all said that they could have done even better in terms of revenue growth and earnings if there were more computing power available.
So, all again coming back into just the tech stack and the rolling wave of investment that this capex is providing, it just shows why this market continues to climb higher and higher because the growth is spreading out into even these far corners of the tech stack.
ROGER: So is that the potential bottleneck, expanding capacity? And are we looking at something that has some legs to it, that this could go for a while?
BRIAN: Yeah, I think there are some durable formations here because you have to have some of these components to get to the far side of computing power that you’re looking for.
What we’re at in the moment is just the very early stages of what AI can be. We won’t know what it will be until we resolve some of these computing issues. We have to have more capacity everywhere you look.
The price of tokens, which is just a parable for the price of computing power, is going higher and higher because there’s just not enough supply of compute available to satisfy the demand. So once we get another 50 or 100 data centres built and they all have these components in place, then we’ll be on the end where we can find out what AI is truly capable of.
But it does mean there’s durable legs to the revenue growth of these component makers, especially in processing speed as well as memory capacity. Those are just really the important infrastructures that data and AI are going to run on for a long time.
ROGER: And there’s lots of free cash flow still floating around, isn’t there?
BRIAN: Yeah, absolutely. And when you look at the free cash flow growth of these memory stocks, it’s just absolutely unbelievable. SanDisk going basically from zero to about $40 billion in cash on hand. That gives them the available financing that they can organically grow that manufacturing capacity that they’re going to need to meet all of this demand.
They don’t have to leverage their balance sheet. They don’t have to take on any type of debt financing. They’re generating enough cash in order to do this type of growth on their own.
That’s one of the reasons the stock price looks attractive at this moment in time, is that they’re going to be able to do this in financing their own growth going forward, which means they’re not tethered to other partners at a later period of time. And that’s, I think, one of the reasons you’re seeing investors react to the stock so positively.
ROGER: And so overall you still see some opportunities then?
BRIAN: I do. I think it’s still an attractive valuation. You haven’t missed the boat, if you will.
Again, the demand for these are going to be very, very long term, meaning three, four, five years. That’s forever when it comes to technology names and technology components. So that means that there’s still upside left, especially in these memory names that we like so much right now.
ROGER: I just want to go back to Nvidia for a sec. What are your thoughts about getting into computers like this, into PCs?
BRIAN: There’s no question that Nvidia has been the gold standard for processing speed. What they’ve been able to do on the enterprise scale with the Blackwell servers that they offer, it’s showing that they are clearly the leader out there in front in what processing speed looks like.
The fact that they’ve been able to reduce that down into a retail-sized unit that will fit in PCs, that’s a real game changer. And to be able to be involved with that, it obviously is impacting Dell and Microsoft in a very positive way.
ROGER: All right, Brian, we have to wrap it up there. But thanks, as always, for joining us.
BRIAN: Thank you.
ROGER: Brian Mulberry, chief market strategist at Zacks Investment Management.
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This BNN Bloomberg summary and transcript of the June 1, 2026 interview with Brian Mulberry are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
