Shares of memory-chip makers Micron Technology, SK Hynix, and SanDisk advanced on Tuesday, driven by renewed optimism around artificial intelligence spending and positioning ahead of Micron's fiscal fourth-quarter earnings report due Wednesday.
The gains came as investors weighed reports that Anthropic, a leading AI company, is preparing for a potential public debut that could value it at more than $2 trillion. According to Reuters, Anthropic plans to spend up to $518 billion on cloud, computing, and infrastructure, which would create substantial demand for semiconductor and memory suppliers. The company's compute and infrastructure spending reached $7.33 billion last year, roughly three times its 2024 level and more than half of its total operating expenses.
Micron shares were up about 2%, while SK Hynix gained approximately 3% and SanDisk rose about 1%. The Philadelphia Semiconductor Index climbed more than 2%, outperforming the broader market. The S&P 500 was little changed, while the Nasdaq Composite edged up 0.2%.
Despite elevated Treasury yields—the 10-year note yield rose 2 basis points to 5.264%—and a slight dip in oil prices, chip stocks found support. Brent crude fell over 1% to around $103.97 a barrel, and West Texas Intermediate dropped 1.7% to $90.99.
Micron's Earnings Outlook
Micron is also benefiting from a separate catalyst as investors position for its earnings report. JPMorgan reiterated its 'Overweight' rating and a $1,540 price target, implying upside of more than 46% from Monday's close. The bank cited "multiple beat-and-raise levers still in play" and noted that the memory market remains structurally tight across DRAM and NAND, which could lead to better-than-expected revenue, gross margins, and earnings.
Pricing trends are a key focus. Micron management had previously warned of a "meaningful moderation in the rate of price increases," but JPMorgan said pricing held up through the quarter. Morgan Stanley also maintained an 'Overweight' rating and a $1,200 price target, stating that near-term conditions are "still very good," supported by strong demand and rising pricing. The firm expects earnings estimates to rise after the results, though "less so than prior quarters."
Baird raised its price target on Micron to $1,520 from $1,280, reiterating an outperform rating. Analyst Tristan Gerra cited increasing demand for agentic AI, slower expected DRAM supply growth in 2027, and a higher-margin outlook for high-bandwidth memory next year.
Anthropic's AI Spending Plans
The enthusiasm around Anthropic is particularly relevant for Micron, given their existing commercial relationship. Earlier this year, Micron signed an agreement with Anthropic to supply memory and storage products and made a strategic investment in the AI company's latest funding round.
Industry expectations point to constrained memory supply continuing into 2027, which could support major producers like Micron and SanDisk. D.A. Davidson's Gill Luria, a noted Micron bull, wrote on Monday that "memory is a critical piece to delivering AI models, and that is unlikely to change." He added that "more memory means better models, more memory means faster inference, and more memory means longer context windows," and that demand is still surging while supply is at least a year away.
Luria also highlighted the growing popularity of Meta's Muse AI product as evidence that new consumer-facing AI applications could create additional computing demand.
Capital Return Potential
Beyond quarterly earnings, investors may be looking for signs of a significant change in Micron's capital-return strategy. JPMorgan analyst Harlan Sur suggested that Micron executives could announce a major new capital-return program, including share buybacks or a higher dividend. Sur noted that the market may underappreciate the pace at which strategic customer agreements (SCAs) are compounding, with forward bit production coverage likely now in the 35%+ range, potentially tracking above 50%.
Wednesday's results and management commentary will offer an indication of whether current pricing strength can continue into the next quarter, and whether the memory cycle's duration will support sustained gains.
This article is for informational purposes only and does not constitute financial advice.
