Key Takeaways
A global rally in semiconductor memory stocks accelerated on May 6, with Hong Kong-listed Montage Technology (06809.HK) closing up 8.21% as a worldwide surge in demand for artificial intelligence components pushed chipmakers to fresh highs.
"The market is reflecting a view that memory's place in the AI infrastructure stack may be structural rather than cyclical," said Dave Mazza, chief executive officer at Roundhill Investments, commenting on the sector's strength.
The move in Asia was part of a broader trend that saw US memory chipmaker Micron Technology gain 11.06%, while Intel surged 12.92%. Sandisk, a pure-play NAND flash producer, climbed 11.98%. The rally also lifted South Korea’s Kospi benchmark by more than 6%, with local giants Samsung Electronics and SK Hynix both rising over 9% as foreign investors poured a net $2.1 billion into Kospi shares. The South Korean won rose more than 1% against the dollar, becoming Asia's best-performing currency on the day.
The intense demand for memory chips, which are essential for training and running artificial intelligence models, is creating a supply-demand imbalance that is expected to last for several years. Market research firm TrendForce expects some device configurations to vanish by the end of 2026 as handsets need more room for local AI processing, while analysts at Jupiter Asset Management point to an undersupplied memory market through 2027.
The AI infrastructure buildout, which Nvidia CEO Jensen Huang has called "the largest infrastructure buildout in human history," requires massive amounts of high-performance memory. High-bandwidth memory (HBM) is stacked alongside AI accelerators from Nvidia and AMD to provide the necessary bandwidth for training large models, while NAND flash is used for the vast storage pools that AI data centers require. This has created a dual demand shock for both DRAM and NAND, with prices for NAND flash rising 60% in the first quarter of 2026 alone.
Micron, one of only three global HBM suppliers, has signaled it can only fulfill between 50% and two-thirds of customer demand in the medium term, with order books stretching into 2027. This structural scarcity has allowed the company to post record gross margins near 75%, with guidance for further expansion.
The rally has produced some staggering corporate results. Sandisk (SNDK), which was spun out of Western Digital in February 2025, has seen its shares surge 3,314% in the past year. The company’s gross margins expanded from 22.5% to 78.4% in a single year, a level of expansion that is almost unheard of in a commodity hardware business. The company reported fiscal Q3 revenue of $5.95 billion, up 251% year-over-year.
Meanwhile, Samsung Electronics recently joined the $1 trillion valuation club, powered by a rally in its shares tied to AI demand. The company's semiconductor arm delivered a historic March-quarter profit with a 48-fold jump that topped expectations.
The explosive moves have pushed valuations for many chipmakers to historic highs. Micron trades at roughly 26 times trailing earnings after a 600% one-year move, while Sandisk’s price-to-earnings ratio sits at 41, well above its historical median. The key question for investors is whether the current demand represents a durable, structural shift or simply the upward leg of another boom-bust cycle.
Hyperscale customers appear to be betting on a structural shift. Google has pledged up to $185 billion in AI infrastructure spending in 2026, while Meta and Microsoft have both cited rising memory pricing as a primary driver of their increased capital expenditure guidance. With Sandisk signing multi-year supply agreements worth over $11 billion and Micron’s HBM capacity sold out for years, the market is pricing in a period of sustained strength for the memory sector.
This article is for informational purposes only and does not constitute investment advice.
