Bank of America favors Micron over Qualcomm as memory gains in AI spending

Memory semiconductors have become a larger fraction of cloud infrastructure budgets than ever before, yet equity investors have been slow to recognize their value. Bank of America attributes this valuation lag to persistent doubts about pricing power, the risk of excess capacity, and reliance on a small number of major customers—all legitimate concerns that have kept memory stocks trading at relatively modest levels. The brokerage's thesis rests on a structural shift in the industry: a move toward longer-term supply contracts and more stable pricing. If that transition materializes, it would reduce the cyclicality and uncertainty that have historically pressured valuations in this segment.

Qualcomm, by contrast, faces multiple uncertainties that weigh on its investment case. Beyond the general slowdown in smartphone demand, the firm is betting on custom silicon efforts whose success is unproven, while also facing headwinds from China exposure and pending patent licensing negotiations with Apple. Bank of America's decision to maintain an Underperform rating on Qualcomm while upgrading its confidence in Micron signals a preference for a steady, structural shift over a turnaround dependent on multiple uncertain bets.