Shares of Micron Technology (MU) jumped 5.02% in after-hours trading on Wednesday, following a report suggesting a significant boost in memory chip prices due to Nvidia's strategic shift in AI server components.

According to a report by Counterpoint Research, Nvidia's decision to switch to smartphone-style LPDDR memory for AI servers could potentially double server-memory prices by the end of 2026. This move is expected to create a sudden surge in demand that the industry may struggle to meet, potentially benefiting memory chip manufacturers like Micron Technology.

The report indicates that Nvidia's pivot to LPDDR memory chips, typically used in phones and tablets, for its AI servers is aimed at reducing power costs. However, this shift is anticipated to have far-reaching effects on the memory chip market. As each AI server requires significantly more memory chips than a handset, Nvidia is poised to become a customer on the scale of a major smartphone maker, representing what Counterpoint describes as a "seismic shift" for the supply chain. This development could lead to tightness in the memory chip market, potentially driving up prices and benefiting major players in the memory chip industry like Micron Technology.