Memory chip stocks Micron, SanDisk slump 20–30%; analyst favors SanDisk's faster growth

Micron Technology and SanDisk have emerged as two of the most popular semiconductor stocks in 2026, both rallying sharply in the first half of the year before retreating. Micron has declined 20% from its all-time high, while SanDisk has fallen over 30%. The pullback has created a buying opportunity if the underlying thesis—sustained demand from AI data centers—remains intact.

The two companies operate in the memory chip market, which consists of two primary types. DRAM memory is used alongside computing units for rapid data access, while NAND memory is used for long-term storage in devices like solid-state drives. Micron manufactures both NAND and DRAM, whereas SanDisk makes only NAND. Both companies have been unable to keep pace with demand from AI hyperscalers expanding data center capacity. Memory chips function largely as a commodity—when supply is constrained and demand is high, prices surge.

The article cautions that memory chip stocks carry cyclical risk. Eventually, demand may weaken or supply may rise to more reasonable levels, causing prices and profitability to fall sharply. However, Micron has signaled to investors that it expects memory chip market tightness to persist beyond 2027, suggesting at least a year and a half of strong pricing and demand ahead. Both companies are growing rapidly: Micron is projected by Wall Street to achieve 81% revenue growth in FY 2027 (which wraps up in August), while SanDisk is estimated to deliver 154% revenue growth in FY 2027 (which ended in June). Despite these robust projections, both stocks trade at low valuations—SanDisk at 7.5 times FY 2027 earnings and Micron at 6.3 times—reflecting market skepticism about the durability of the AI memory boom. The article concludes that SanDisk appears to be the more compelling opportunity given its much faster growth rate relative to its valuation, though Micron is also a viable choice.

Micron and SanDisk have captured investor interest as critical suppliers to AI hyperscalers building out data center capacity. Both companies struggled to meet demand over the past year, pushing memory chip prices higher as a scarce commodity. However, the recent 20–30% pullback reflects broader market concern about the cyclical nature of the memory chip industry: once demand cools or supply catches up, margins and profits could compress sharply. The article notes that nobody knows when this cycle will turn, creating wariness despite strong near-term fundamentals.

Micron's signal to investors that tightness will persist beyond 2027 provides some reassurance on the length of the current upcycle, and both companies are trading at historically low multiples (6.3× and 7.5× forward earnings, respectively). This low valuation suggests the market is pricing in skepticism about whether the AI memory boom will sustain. The key distinction is growth trajectory: SanDisk is projected to accelerate much faster than Micron in FY 2027 (154% versus 81%), which the article suggests makes SanDisk the better risk-reward opportunity if the long-term shortage thesis holds.

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