Shares of Micron Technology (NASDAQ: MU) and SanDisk (NASDAQ: SNDK) rose in early premarket trading on Monday, recovering some ground after a severe semiconductor sell-off pushed both stocks more than 28% below their June highs. At 5:45 a.m. ET, Micron was up over 3%, while SanDisk gained roughly 2.5%, as investors sought to capitalize on the sharp decline.
The bounce highlights a central debate among memory investors: whether last week's rout presents a buying opportunity or signals the beginning of another downturn in a notoriously cyclical industry. The Philadelphia Semiconductor Index fell 1.6% on Friday and entered bear market territory, dropping more than 20% from its June peak. Micron ended the week about 30% below its June record, while SanDisk had retreated more than 28% from its June 25 high.
Shortages Keep Bullish Case Alive
Despite the sell-off, the fundamental argument for memory stocks remains intact. KeyBanc analyst John Vinh noted that “memory shortages remain persistent” after supply-chain checks in Asia, and expects tight conditions to continue through 2027. KeyBanc forecasts DRAM prices will rise 15% to 20% sequentially in the third quarter and another 15% in the fourth. NAND prices could jump 30% to 40% this quarter, followed by another 15% increase.
Micron is heavily exposed to DRAM and high-bandwidth memory (HBM) used alongside AI accelerators. SanDisk focuses on NAND flash and enterprise solid-state drives, which store and retrieve datasets for AI workloads. Evercore ISI analyst Amit Daryanani told clients that SanDisk’s long-term customer agreements are creating a “new memory paradigm,” improving visibility into revenue, earnings, and cash flow while clean-room capacity remains constrained.
JPMorgan cross-asset strategist Fabio Bassi described the chip decline as a temporary “wobble,” rather than the end of the AI rally, in comments reported by The Wall Street Journal. Bassi noted that memory stocks had become highly concentrated positions, making them vulnerable to large moves from small sentiment shifts, but that demand for AI computing capacity remains strong.
Massive Capacity Plans Revive Glut Fears
The same shortages that support prices are also driving enormous investment. Samsung and SK Hynix have outlined hundreds of billions of dollars in new manufacturing projects, while Micron recently raised its planned U.S. investment to more than $250 billion through 2035. That spending will take years to affect output, but it revives memories of previous cycles where shortages led to overbuilding and falling prices.
China’s ChangXin Memory Technologies adds another layer of risk. Morgan Stanley estimates China could provide about 30% of net DRAM wafer additions through 2028. Higher memory prices may also become self-defeating, as costlier DRAM, HBM, and NAND raise the expense of AI infrastructure, increasing pressure on hyperscalers already being asked to prove returns on huge capital budgets.
For context, the broader semiconductor sell-off was partly triggered by TSMC’s capital expenditure hike, as covered in Memory Chip Stocks Slide as TSMC's Capex Hike Triggers Broader Semiconductor Selloff. Meanwhile, analysts remain bullish on SanDisk despite the pullback, with some seeing 115% upside, as discussed in SanDisk Down 35%: Analysts See 115% Upside Amid Memory Selloff. KeyBanc’s positive outlook on Micron was also highlighted in Micron Jumps 4% as KeyBanc Sees Memory Tightness Through 2027.
The memory sector remains at a crossroads: persistent shortages and AI-driven demand support near-term prices, but the massive capacity buildout and historical boom-bust cycles caution against complacency. Monday’s rebound suggests dip buyers are willing to bet on the bull case, but the broader valuation and spending concerns that triggered the sell-off have not disappeared.
This article is for informational purposes only and does not constitute financial advice.
