Why are memory chip prices up so much?

Central processing units (CPUs) and graphics processing units (GPUs) used in AI require memory chips (NAND for long-term storage and DRAM for working memory). Hyperscalers are building AI infrastructure so rapidly that manufacturers cannot keep pace, creating an unprecedented supply shortage that has driven NAND and DRAM prices up 200% and 300% respectively in the past year.

When do analysts expect the boom to end?

Wall Street expects memory chip sales to peak in 2028. After that, earnings are projected to decline—Micron's adjusted earnings are projected to decline 27% in fiscal 2029, and Sandisk's are projected to decline 54% in fiscal 2029.

What happened to these stocks in the last boom-and-bust cycle?

During the COVID-19 pandemic, demand for personal computers and gaming consoles spiked, initially pushing memory chip prices higher. But manufacturers overcorrected, and prices fell as consumer behavior normalized in 2022 and 2023. Western Digital and Micron shares dropped 60% and 50% respectively from their 2022 levels, and both reported negative earnings in 2023.

Yahoo Finance AIJun 30, 2026Jun 30, 2026, 19:00 JST

Memory Chip Stocks Soar 200%+ on AI Boom—but History Warns of Crash Ahead

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3 Key Points

What happened
Micron and Sandisk shares have surged 203% and 217% respectively in the last three months, driven by unprecedented demand for memory chips used in AI infrastructure. NAND and DRAM prices have jumped 200% and 300% in the past year as hyperscalers (large cloud providers) rush to build AI systems.
Why it matters
Memory chipmakers have historically been prone to boom-and-bust cycles. Wall Street expects memory chip sales to peak in 2028, after which earnings are projected to decline sharply—Micron's adjusted earnings are projected to decline 27% in fiscal 2029, and Sandisk's are projected to decline 54% in fiscal 2029. The last cycle saw Western Digital and Micron shares drop 60% and 50% respectively from their 2022 peaks.
What to watch
Today, Micron trades at 24 times earnings and Sandisk at 67 times earnings. Wall Street analysts see Micron as undervalued (median target of $1,585 per share implies 46% upside), but call Sandisk too expensive (median target of $1,750 implies 12% downside from its current $1,980 price).

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FAQ

Why are memory chip prices up so much?: Central processing units (CPUs) and graphics processing units (GPUs) used in AI require memory chips (NAND for long-term storage and DRAM for working memory). Hyperscalers are building AI infrastructure so rapidly that manufacturers cannot keep pace, creating an unprecedented supply shortage that has driven NAND and DRAM prices up 200% and 300% respectively in the past year.
When do analysts expect the boom to end?: Wall Street expects memory chip sales to peak in 2028. After that, earnings are projected to decline—Micron's adjusted earnings are projected to decline 27% in fiscal 2029, and Sandisk's are projected to decline 54% in fiscal 2029.
What happened to these stocks in the last boom-and-bust cycle?: During the COVID-19 pandemic, demand for personal computers and gaming consoles spiked, initially pushing memory chip prices higher. But manufacturers overcorrected, and prices fell as consumer behavior normalized in 2022 and 2023. Western Digital and Micron shares dropped 60% and 50% respectively from their 2022 levels, and both reported negative earnings in 2023.

Yahoo Finance AIRead Original Article

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