Micron Technology and SanDisk shares edged higher in premarket trading on Tuesday, even as the 10-year Treasury yield approached 5.27%, a level not seen since 2007. The moves suggest that strong memory fundamentals are providing some insulation from the broader pressure on technology valuations.
Micron rose about 1.8% before the bell, while SanDisk gained roughly 1.0%. This resilience comes amid a challenging macro environment, with Brent crude trading around $106 and markets pricing a 72% probability of another Federal Reserve rate increase in October.
Memory shortages underpin Micron's outlook
Baird analyst Tristan Gerra raised his price target on Micron to $1,520 from $1,280 on Monday, maintaining an Outperform rating. Gerra cited "acute shortages" expected to persist through 2027, driven by rising agentic-AI demand and slowing industry memory-supply growth.
Baird projects total DRAM supply growth to slow to about 20% next year, while HBM supply growth remains near 60%. The firm also expects DRAM contract prices to rise another 10% sequentially in the fourth quarter, with HBM gross margins at Micron and SK Hynix potentially exceeding 80% in 2027.
Rising yields typically compress the multiple investors are willing to pay for future earnings. However, Micron's earnings expectations are moving higher, offsetting some of that valuation pressure.
SanDisk's shift toward AI infrastructure
SanDisk is benefiting from a similar tailwind, though its extraordinary 2026 rally makes the valuation debate more sensitive. Rosenblatt analyst Kevin Cassidy argues that AI is transforming NAND flash into a "system-critical component of AI infrastructure," as data-center workloads demand higher performance, endurance, predictable supply, and high-capacity storage.
Rosenblatt initiated coverage of SanDisk with a Buy rating and a $2,400 target. Cassidy also highlighted multiyear customer agreements that could provide stronger revenue and supply visibility than in past NAND cycles.
Traditionally, NAND producers have been viewed as cyclical businesses, with profits tied to commodity pricing. AI could weaken that framework, but it also embeds more future growth into the share price, making the stock more sensitive to macro headwinds.
Macro pressure intensifies
The macro backdrop is becoming harder to ignore. Jefferies economist Mohit Kumar told The Wall Street Journal that markets are in a "one factor world right now, with oil prices impacting rates and rates being the main driver of all asset classes." Higher oil prices fuel inflation concerns, which increase expectations for tighter Fed policy, pushing Treasury yields higher and reducing the valuation assigned to future earnings.
Micron and SanDisk are thus caught between two powerful forces: memory scarcity is pushing expected profits higher, while the bond market is pushing the multiple investors will pay for those profits lower. The coming weeks, including Micron's earnings report, will test whether the memory boom can outrun the bond market.
This article is for informational purposes only and does not constitute financial advice.
