Google’s recent announcement of TurboQuant, a new AI model compression method, has triggered a sell-off in memory stocks, with SK Hynix and Samsung shares dropping 6% and nearly 5%, respectively. This innovation claims to reduce memory requirements for large language models by six times, raising concerns among investors about potential declines in chip demand. The impact was felt across the sector, with Kioxia and U.S. firms like Sandisk and Micron also experiencing losses.
Despite the immediate pressure on memory stocks, analysts suggest that the long-term outlook remains robust. The memory market continues to benefit from strong demand and supply shortages, which have driven prices and profits to record levels. Over the past year, Samsung shares have surged nearly 200%, while Micron and SK Hynix have seen increases of over 300%.
The key takeaway is that while TurboQuant may prompt short-term profit-taking, it is unlikely to fundamentally alter the long-term demand dynamics for memory chips, as improvements in AI capabilities typically necessitate more advanced hardware.
Source: cnbc.com