Bank of America: Consumer electronics opens a new chapter in AI, Arm and Micron Tech are expected to benefit

According to the Zhītōng Finance APP, Bank of America released a research report, raising the target price for Arm (ARM.US) and Micron Technology (MU.US). The reason is that the wave of generative artificial intelligence is shifting towards consumer devices, including PCs and smartphones.

Analysts led by Vivek Arya wrote in an investor report, "It is certain that we are still in the early stages, with no essential artificial intelligence applications on smartphones and PCs yet. However, consumer hardware companies will try to leverage the growing consumer interest and the momentum of the expanding software ecosystem to drive faster upgrade cycles. Looking back, a similar trend occurred during the 4G/5G deployment, with devices equipped with advanced hardware preceding the emergence of mobile applications like Instagram and Uber. 4G/5G brought about a demand for better cellular modems/RF, and we believe that artificial intelligence on devices will be most beneficial for processor and memory companies."

Bank of America raised Arm's target price from $150 to $180 and Micron Technology's target price from $144 to $170.

The analysts at the bank added that as artificial intelligence shifts to edge devices in several different ways, Arm may benefit: faster transition to the v9 architecture (royalty rates are double that of v8, between 4% and 5%) and comprehensive computing solutions (royalty rates are four times that of the past, i.e., 8% to 10%), as well as continuing to gain market share in competition with AMD (AMD.US) and Intel (INTC.US), "as more authorized companies adopt Arm technology to provide efficient client and data center processors."

Furthermore, the analysts stated that with more high-bandwidth memory (HBM) applications in the cloud and support for AI PCs and smartphones, DRAM will increase by 12% to 15%, benefiting Micron Technology