theres one corner of the semiconductor sector that analysts are particularly bullish on to play the artificial intelligence theme its dram or dynamic random access memory a type of semiconductor memory needed for data processing as the use of ai grows more and more memory is required indeed morgan stanley called memory the foundational building blocks of artificial intelligence memory is a cheaper way to play the start of ais explosive new decadelong growth phase said morgan stanley in a may 29 report adding that investors are underestimating the impact of ai on the memory segment analysts have also highlighted that theres more upside for the prices of dramrelated stocks due to production cuts top dram producers have lowered their production by 2030 and their capital expenditure plans by as much as 50 meanwhile the demand outlook is starting to improve as customer inventory levels have come down henry mallaridauria chief investment officer of emerging markets value at ariel investments told cnbc pro ai servers use four times as much dram as normal servers said mallaridauria adding that they are set to grow from a midsingledigit portion of total dram revenues to the midteens over the next few years meanwhile citi in a may 30 note said that it was raising the outlook for dram average selling prices on the back of the production cuts and solid penetration growth in ddr5 – a type of dram our industry checks reconfirm that ddr5 demand including hbm3 demand from nvidia has been rapidly increasing lately said citi considering additional ddr5 demand from microsoft and google we expect ddr5 penetration will rapidly increase throughout the year nvidia and dram nvidia has been at the center of the ai buzz and it recently reported much betterthanexpected results and a huge forecast beat driven by strong ai demand the firm dominates the market for graphics processing units or gpus which are used to speed up ai processes the american chipmaker is driving demand for the high bandwidth memory hbm segment in the dram sector according to analysts its a key component needed to run nvidias ai processors such as a100 and h100 something that regular dram cannot do said bank of america in a june 1 report in fact nvidias competitors amd  intel and even some chinese fabless firms are also promoting ai gpus suggesting increased new high bandwidth memory orders the bank said we already observe rising competition among nvidia competitors to procure more hbm in korea bofa analysts wrote they added that the global high bandwidth memory market is set to grow from 2 billion in 2022 to 12 billion in 2027 sk hynix south korean chipmaker sk hynix is a favorite among analysts in the dram space morgan stanley named it as a top pick and said it was a key beneficiary of nvdas ai opportunity while both bofa and citi are bullish on the stock morgan stanley gave it a price target of 140000 korean won 110 or about 17 upside while bofa had a 160000 korean won price target on the stock or 34 upside mallaridauria too believes sk hynix is well positioned to benefit from ai the korean company is the largest pureplay memory producer in the world and has a particularly strong position in the highend dram products which are used in ai servers he said samsung electronics another top pick for both morgan stanley and citi is samsung electronics  the former gave it a price target of 90000 korean won representing potential upside of 25 morgan stanley says samsung is an indirect beneficiary of tighter supply driven by ai gpu and server demand we view our ow call as more defensible on costs balance sheet strength and the ability to weather a severe downturn better morgan stanley said expectations are down and valuation is near historical lows which sets the stock up nicely samsung and sk hynix had a combined market share of dram of around 7080 in 2020 according to bofa cnbcs michael bloom contributed to this report