Micron and Sandisk continue rally as demand for memory expected to persist
Shares of memory companies Micron and Sandisk jumped on Monday, continuing their extended runs, after Melius Research said demand could remain high through the end of the decade. Memory companies are experiencing major gains from a global shortage for microchips to power artificial intelligence. High Bandwidth Memory (HBM), bonded directly to the most advanced graphics processing units from Nvidia and AMD, powers nearly all major AI data centers. Ben Reitzes, an analyst at Melius, upgraded Micron’s stock rating to buy, predicting a 41% gain over the next 12 months. The stock has surged over 550% in the past year, with a record valuation nearing $600 billion. Reitzes noted that the market will eventually pay more for the durability and demand profiles AI makes possible, expecting Nvidia to invest more in memory. Micron’s market cap is approaching $600 billion, while Sandisk’s stock rose 8.1% on Monday, up over 3,000% in the past year, with a market cap exceeding $157 billion. Bernstein analyst Mark Newman also recommended Sandisk’s stock, citing strong earnings revisions driven by high memory prices. HBM consists of stacks of DRAM, enabling fast data storage for GPUs to run parallel tasks. The shortage in general-purpose memory, caused by top memory makers like Micron, Samsung, and SK Hynix, has driven prices skyrocketing. Counterpoint Research reports a 30% quarter-over-quarter growth in DRAM demand for two consecutive periods, pushing up PC prices by 17% this year and solid-state drive costs to two or three times their December levels. Sandisk, a major maker of solid-state drives using NAND memory, faces similar demand surges as AI servers require more storage. Market conditions are pushing buyers into longer contracts—three or even five years—with hyperscalers securing supply agreements to edge out competitors. SK Hynix and Micron have both indicated willingness to sign long-term deals to secure demand, though it takes about two and a half years to build new factories. Micron is investing $24 billion in a major NAND manufacturing expansion in Singapore and new U.S. chip fabs in New York and Idaho. SK Hynix has broken ground on its first U.S. memory packaging plant in Indiana, expanding production and facilities in South Korea. Sandisk will report quarterly results next week.
Source: CNBC