The surge in shipments of artificial intelligence (AI) servers has been nothing short of remarkable over the past few years, driven by cloud service providers' substantial investments in infrastructure. This infrastructure is designed to train AI models and facilitate AI inferencing, enabling the deployment of these models in practical applications. TrendForce, a leading market research firm, projects that the global AI server market will reach an impressive $187 billion in revenue this year, marking a 69% increase from 2023. This growth has created significant opportunities for various companies, from chip manufacturers like Nvidia to custom chip producers such as Broadcom and server solution providers like Dell Technologies. This article will delve into the prospects of two companies, Micron Technology (NASDAQ: MU) and Marvell Technology (NASDAQ: MRVL), which manufacture critical components for AI servers.

Micron Technology's high-bandwidth memory (HBM) chips are experiencing soaring demand. HBM is essential in AI server chips, particularly graphics processing units (GPUs), due to its ability to expedite data transfer, thereby reducing processing times, enhancing performance, and minimizing power consumption. The demand for HBM is so intense that Micron has reported selling out its entire production capacity for this year and the next. Micron's management has also indicated that the company will have a more diversified HBM revenue stream for 2026, thanks to new business secured for its latest HBM3E chip. The company has already begun shipping this new chip to customers for approval.

Micron asserts that its HBM3E chip consumes 20% less power and offers 50% more capacity compared to competing products. The company anticipates commencing the production ramp-up of HBM3E in early 2025, with output increasing throughout the year. Furthermore, Micron is confident in its ability to capture a larger share of the HBM market. According to Singapore-based news channel CNA, Micron is reportedly aiming to secure 20% to 25% of the HBM market by next year. This ambition is expected to significantly boost Micron's growth as the company forecasts the HBM market's revenue to soar to an impressive $25 billion in 2025, up from just $4 billion in 2023.

The expansion of the end market, coupled with Micron's focus on capturing a larger share of the HBM space, are the driving forces behind the company's expected revenue jump to a staggering 52%, reaching $38 billion in the current fiscal year, which began on August 30. Analysts also predict a substantial increase in Micron's earnings, from $1.30 per share in the previous year to $8.94 per share. Micron is expected to maintain this rapid growth pace in the next fiscal year as well.

Marvell Technology, known for its application-specific integrated circuits (ASICs), is also capitalizing on the growing demand for custom AI chips. Major cloud service providers, including Meta Platforms, Alphabet's Google, and Amazon, are increasingly seeking to develop in-house processors to reduce costs. This trend is expected to make ASICs account for 26% of the overall AI server chip market by 2024. The deployment of ASICs in AI servers is anticipated to grow at a healthy rate, presenting a potential revenue opportunity worth an impressive $150 billion. Marvell is already leveraging this lucrative opportunity.

Although Marvell's overall revenue decreased by 5% year over year in the second quarter of fiscal 2025 to $1.27 billion, due to weaknesses in various end markets, its data center revenue saw a remarkable year-over-year increase of 92%, reaching $881 million. Marvell's CEO, Matt Murphy, highlighted on the latest earnings conference call that the company's AI custom silicon programs are progressing well, with the first two chips now ramping into volume production. Development for new custom programs, including projects with a new Tier 1 AI customer announced earlier this year, are also on track to meet key milestones.

As a result, Marvell expects its data center business to grow at an accelerated rate, with an improvement over the 8% sequential growth reported in the previous quarter. The company's guidance for the current quarter points to an improvement in its financial performance, with expected revenue of $1.45 billion in fiscal Q3, up from $1.42 billion in the same quarter last year. Analysts are also anticipating robust growth for Marvell over the next couple of fiscal years, with earnings expected to increase at a compound annual growth rate of 21% for the next five years.

Investors seeking to capitalize on the growing deployment of AI servers may consider Micron Technology and Marvell Technology as smart investment options. Both companies are well-positioned to benefit from the expanding AI server market, with Micron offering an attractive valuation and Marvell poised for growth acceleration due to the significant opportunity in the AI server market.