Memory chips are done playing second fiddle. AI data centers are swallowing more storage and bandwidth with every expansion, putting a premium on hardware. That shift is lifting prices and profits, but tying the rally closer to hyperscaler spending.
Demand shock: Memory is taking a much larger cut of the semiconductor market as AI changes where chip spending goes. Susquehanna analyst Mehdi Hosseini says the category now accounts for 50% to 55% of industry revenue, compared with 20% to 30% historically. That puts Micron Technology, SanDisk, Western Digital, and Seagate Technology in a stronger position as semiconductor revenue heads toward $1.5T in 2026.
- Susquehanna expects DRAM prices to rise 50% sequentially this quarter, with NAND prices climbing 60% over the same period.
- UBS lifted its 2027 blended HBM price-growth forecast to roughly 79% year over year, up from its prior 67% estimate.
Can the Trade’s Durability Hold?
Memory stocks are trying to outrun their boom-bust reputation. CNBC contributor Todd Gordon points to the DRAM ETF pressing its summer highs, while its performance against the S&P 500 and broader semiconductor holdings has turned higher. Investors are betting that stronger earnings can last longer this time, yet valuations still show how much skepticism remains from past cycles.
- Micron recently traded at 6.5x expected next-12-month earnings, making it one of the Nasdaq 100’s cheapest tech stocks despite the stronger outlook.
- SanDisk traded near 8.3x forward earnings even as Gordon cited next-12-month EPS of $214.10, leaving a wide gap between profit growth and valuation.
Cycle breaker: The old volatility has not disappeared. Bloomberg reported that SanDisk and Western Digital recently fell more than 30% from their peaks, while Micron and Seagate dropped roughly 20%. MoneyFlows’ Alec Young sees those pullbacks as a warning that “the smart money is moving on,” while Zacks strategist Brian Mulberry argues the selloff clashes with fundamentals he calls “absolutely spectacular.” The chips have changed, but Wall Street still needs convincing that the cycle has too.