Shares of etch and deposition chip equipment maker Lam Research (LRCX +2.53%) rallied on Wednesday, up a whopping 6.6% on the day to reach all-time highs.
Lam's equipment portfolio is particularly geared toward vertically stacking semiconductor materials, which is becoming increasingly important not only for the traditional memory market, but for new chiplet-based logic chips as well.
Both end markets received jolts of good news today.
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OpenAI signs massive memory deal, and Intel may have a foundry customer
On Wednesday, ChatGPT parent and AI leader OpenAI announced an agreement with Korean memory giants Samsung and SK Hynix, to supply its massive Stargate project with memory. The companies also agreed to build several "Stargate Korea" data centers to supply the high demand for ChatGPT in South Korea.
According to the disclosures, the deal could end up sending 900,000 wafers per month to Stargate, which would amount to a whopping 40% of the total DRAM industry today.
That would likely necessitate a strong increase in DRAM and NAND flash investment to increase supply, which means the purchasing of more and more Lam Research machines.
NASDAQ: LRCX
Key Data Points
In addition to the good memory news, rumors are flying with regards to Intel (INTC +13.96%). According to news outlet Semafor, Intel is in talks with rival Advanced Micro Devices (AMD +11.44%) to provide foundry services for AMD's chips. Intel has thus far been tight-lipped around landing foundry customers for its current 18A or upcoming 14A nodes. And Intel scared investors in its most recent quarterly report, where it noted the company might not invest in its 14A node at all if it doesn't land a significant third-party customer.
But if AMD and/or other chipmakers sign on as customers for Intel's foundry, that means Intel is more likely to invest in its 14A manufacturing fabs -- and that means more investment in Lam Research machines.
Lam is a key AI "picks-and-shovels" play for AI
No matter which chip eventually wins the AI race, it's highly likely Lam's leading etch and deposition tools will play a key part in making them. As such, no wonder the stock has taken off with the highly bullish AI demand forecasts over the past month, which were only augmented by today's good news.
