Micron up 460%, Sandisk 1,190% as memory boom nears bust

Micron and Sandisk have been major beneficiaries of the AI infrastructure build-out, as hyperscalers race to expand capacity and memory chipmakers struggle to keep pace. That shortage has made NAND and DRAM more expensive, translating into strong financial results: Micron's September-quarter revenue rose 379% to $54 billion, and Sandisk's July-quarter revenue rose 372% to $9 billion.

But memory chips are commodities, meaning suppliers compete mainly on price and are ultimately at the mercy of supply and demand. The industry has long alternated between undersupply and oversupply. During the pandemic, prices increased amid strong consumer electronics demand, then cratered when demand normalized, and NAND and DRAM prices dropped about 70% between early 2021 and late 2023. Shares of Micron and Western Digital, Sandisk's former parent, fell 50% and 60% respectively, even though both stocks had reasonable valuations at the time.

The current situation mirrors that setup. NAND and DRAM prices have already declined from their peaks earlier this year, and prices are likely to fall further as memory chip companies expand production capacity. Lower prices would pressure earnings at Micron and Sandisk, and investors may begin pricing in that deterioration well before it appears in financial results. Shares of Micron and Sandisk currently trade 14% and 29% below their highs, but history suggests both stocks could drop much further as supply catches up with demand. The key question is whether the AI-driven demand surge can outrun the coming capacity expansion, or whether the next bust is already around the corner — a risk that argues for keeping any positions relatively small.