Micron and SanDisk stocks surge on AI memory chip rally and shortages
Micron Technology shares have surged over 30% on the week due to strong demand for memory chips, with SanDisk also benefiting from the rally. Both companies are experiencing strong earnings growth, but analysts believe the stock remains undervalued. The AI memory chip market is currently experiencing a supply-demand imbalance, with potential for further upside if the market re-rates these essential AI infrastructure suppliers.
Micron shares have seen a significant increase this week, exceeding 30% in the wake of a surge in demand for memory chips, while . SanDisk has also gained significantly following its spin-off and integration into the AI infrastructure market .
Despite the rally, analysts believe that the stock remains undervalued, trading at 11x forward earnings . Micron's high bandwidth memory chips are fully booked for 2026, suggesting strong demand for its products . However, potential risks include oversupply and potential execution challenges related to the company's $25B expansion plans .
The AI memory chip market's supply-demand imbalance has driven hyperscalers to sign multi-year contracts, resulting in memory companies operating at 80%+ margins . This extreme imbalance suggests potential further upside for memory stock prices if the market re-rates these essential AI infrastructure suppliers, implying a re-rating in line with the S&P 500 (21.5x) and Nvidia (37x) valuations .
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