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

Key takeaway

• Memory chip stocks Micron and Sandisk have doubled in three months on surging demand from AI infrastructure buildout.

• However, Wall Street and history suggest a sharp reversal is likely: memory chips follow boom-and-bust cycles, and analysts expect earnings to decline significantly after a projected 2028 peak—mirroring the 50–60% crashes both stocks suffered after the last cycle in 2022–2023.

3 Key Points

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.