Memory chipmakers Micron Technology, SK Hynix, and SanDisk saw their shares climb on Tuesday, recovering from a recent sell-off as investors rotated back into semiconductor names. The gains were supported by a drop in crude oil prices and fresh signals from Apple that memory costs are set to keep rising.
Micron and SK Hynix each advanced more than 3%, while SanDisk jumped over 5%. The move came as Brent crude slipped about 1% to around $103 per barrel, extending losses from the prior session as traders monitored potential progress in US-Iran peace talks. President Donald Trump said he had reached an agreement with Israeli Prime Minister Benjamin Netanyahu and that Washington would halt military aid to Israel after this year.
Apple's Warning Reinforces Pricing Power
Memory stocks also drew support from Apple's latest earnings commentary. Apple CEO John Ternus, in his first earnings report since taking the role, described the current memory-pricing environment as "unprecedented." He warned that higher memory costs would pressure gross margins and that the increase would likely persist beyond the December quarter.
"What we're seeing with memory pricing right now is unprecedented," Ternus said on the earnings call, adding that Apple is paying more than it did earlier this year. "Looking beyond the December quarter, we see the pricing for memory purchases continuing to increase."
While rising component costs pose a challenge for electronics manufacturers, they can benefit memory producers by supporting selling prices and margins. Yardeni Research noted that memory manufacturers are sold out into 2029, reflecting robust demand from AI infrastructure developers and limited supply.
Analysts Expect Semiconductor Rebound
The rebound follows a brutal month for technology shares. Since October 6, the largest AI and semiconductor stocks have lost about $5 trillion in market value, according to Yahoo Finance calculations, as investors questioned the returns on heavy AI spending.
Market veteran Ed Yardeni said the recent sell-off was not a full-blown rout but was "taking some air out of the AI bubble," which he views as a positive development. In an interview with CNBC-TV18, Yardeni said he expects semiconductor stocks to rebound, arguing that AI is a real technology that will eventually become profitable, even though identifying the best-positioned companies remains difficult.
He added that the pullback has lowered valuations even as analysts continue to raise earnings expectations for AI-related companies. Semiconductor stocks currently trade at a forward price-to-earnings ratio of about 13.5, below the S&P 500's 18.5. Strong cloud revenue growth and substantial order backlogs also support his outlook.
Micron's Earnings Prospects Remain Strong
Micron's earnings outlook is particularly robust. Analysts expect its diluted earnings per share for fiscal 2027, ending in August, to rise 136.5% to $177.03. The company has beaten consensus earnings estimates in each of the past four quarters. Among the 42 analysts covering Micron, the consensus rating is Strong Buy, comprising 34 Strong Buy ratings, five Moderate Buys, and three Holds.
This article is for informational purposes only and does not constitute financial advice.
