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Micron: 'AI Is Going To Eat Software'

Jun. 01, 2020 5:52 AM ETMicron Technology, Inc. (MU)47 Comments
The Profit Hunter profile picture
The Profit Hunter


  • The world is gradually moving away from human-coded to AI-powered software.
  • AI-driven software requires a higher content of dynamic random access memory.
  • Semi-conductors were one of the first sectors to sell off as the recession unfolded but should be one of the first to recover.

In 2011, Mark Andreessen wrote a famed essay entitled "Why Software Is Eating the World". The paper was prescriptive in so far as virtually all industries were impacted by technology and many were vastly disrupted. Yet, writing software itself remains one area, somewhat ironically, that has not been "eaten" by software. This may be about to change. Jensen Huang, CEO of Nvidia (NVDA), was interviewed for MIT Technology Review, where he said, "Software is going to eat the world, but AI is going to eat software". If AI tools can write programs and solve problems that human programmers have been unable to tackle, then the world will enter a new paradigm. For certain basic tasks, such as image recognition, AI algorithms are already superior, i.e., more accurate than algos written by human programmers.

Now consider DataRobot, a tool that allows one to automate building and deploying advanced AI applications - without the need for human programming. In the world of testing, there are programs such as Mabl and TestCraft which use AI to test web applications and user interfaces. These tools may be implemented without coding skills. Diffblue uses AI to automatically write unit tests for Java that were previously done manually.

Micron (NASDAQ:MU) sits squarely in the epicentre of these trends. Its technology is used to power the infrastructure that facilitates artificial intelligence. The company’s high-capacity memory and multi-chip packages are used for AI training and inference engines - whether in the cloud or embedded in mobile and edge devices. However, there is a kicker. AI servers require six times the amount of dynamic random access memory (DRAM) compared with standard servers. As a consequence, the demand curve for DRAM is going to be different than what many expect if AI adoption accelerates.

A Supportive Industry Structure

The market

This article was written by

The Profit Hunter profile picture
I am a private investor with 15 years working in global blue chip asset management houses. My investment style involves identifying a handful of high quality businesses with strong competitive moats and durable economic franchises. Once I become comfortable with the investment case, I tend to hold such businesses for years, if not decades. My goal is to share business insights and perspectives.

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