The Morning Download: AI Makes Memories

Good morning. The most interesting aspect of the meteoric rise of memory chip makers Micron and SK Hynix isn’t that their market caps have each exceeded $1 trillion, although, sure, that’s a big deal.

Highlights from the Journal’s coverage:

• Shares of the world’s second-largest memory-chip maker SK Hynix have more than tripled this year. On Wednesday, they closed 9.3% higher, bringing the South Korean firm’s market capitalization to 1.599 quadrillion won, equivalent to $1.061 trillion.
• On Tuesday, Micron also reached the $1 trillion market-cap milestone, with its stock jumping 19% to close at $895.88. 

As capital pours into the global AI infrastructure build out, “chip makers stand to benefit from tighter supplies of high-performance computing chips and higher prices for memory products,” the Journal writes.

Betting on a new multiple. “Micron trades at a notably low forward price-to-earnings ratio—8.4 times, according to FactSet—because the memory-chip industry goes through cycles of boom and bust,” Barron’s writes. UBS analyst Timothy Arcuri raised his target price on the stock to $1,625 from $535 and reiterated a Buy rating on the company, based on the theory that long-term supply agreements “will be soon locked in at pricing slightly below current levels,” Barron’s said. Arcuri’s target reflects a P-E ratio of 15 times his forecasted 2029 per-share earnings for Micron.

Regardless of where the price of chip makers and other AI infrastructure companies goes from here, it won’t be a function of financial gravity, or pattern-matching with prior boom-bust cycles. It’s going to come down to the nuts and bolts of the market as it exists today, including the extent to which customers are willing to lock into longer contracts.

AI comes for Phoenix's cubicle jobs. The WSJ looks at Phoenix's back-office economy, where tens of thousands face an uncertain future as AI and offshoring eliminate the customer-service, data-entry, and administrative positions that have contributed to the region's economic foundation.

The number of customer-service representatives in metro Phoenix alone has tumbled 26% in the most recent four-year span the Labor Department measured.

What's happening in Phoenix, the country’s call-center capital, is America's back-office crisis writ large.

Losses are expected to mount as AI takes over the kind of basic, repetitive tasks that are often back-office hallmarks. The Labor Department has projected employment in this broad sector will fall by 4% in the next eight years, the steepest drop among all major employment categories.

• Ahead of this year's Computex conference in Taipei, Taiwan, Nvidia CEO Jensen Huang on Wednesday announced plans to spend $150 billion annually with Taiwanese suppliers. Huang said the company already is spending around $100 billion a year in the country. Barron's reports that he didn’t give a time frame for the investment boost. 

• Paris-based nuclear power developer Newcleo said Wednesday that it plans to go public through a merger with a blank-check company in a deal valuing it at about $2.4 billion, WSJ reports. Newcleo would be the latest in a series of nuclear-power developers to go public, benefiting from a surge in public popularity and a rise in electricity demand from tech companies looking to power their AI efforts. 

• Executives from Apple and Google said a proposed bill in Canada to give police access to information on their digital devices.would force them to change their products to allow for more surveillance and potentially compromise encrypted systems. The tech giants are among the biggest corporate heavyweights to attack the proposed Canadian measures, which officials in Ottawa argue would give law-enforcement authorities access to digital evidence.

• China's securities regulator has approved an approximately $4 billion share offering by ChangXin Memory Technologies, a homegrown DRAM chip maker that could become the country's largest public offering this year, WSJ reports.

• A growing roster of AI-native advisory startups in the U.K. is challenging the Big Four for market share, the FT reports. 

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Follow Isabelle Bousquette on LinkedIn, Instagram, X, and TikTok for more behind the scenes on her tech and AI coverage, and lately, her contributions to the WSJ Leadership Institute's new Executive Resilience series, where she's profiling America's top execs about their fitness and wellness habits.

Follow Belle Lin on LinkedIn and X for her latest reporting on enterprise technology and AI.

Steven Rosenbush is chief of the enterprise technology bureau at the WSJ Leadership Institute. He also has a column. You can follow him on LinkedIn.

Tom Loftus is the editor of The Morning Download. He suggests following Isabelle, Belle and Steve on their various social channels. But if you insist, here's his LinkedIn.