Memory Stocks Rally as SanDisk Jumps 12% on AI Demand

Memory and storage stocks extended their rally Wednesday, with SanDisk jumping 12 percent and SK Hynix climbing 7.5 percent, as AI-driven demand tightens supply through 2027.

Micron Chief Business Officer Sumit Sadana told investors at KeyBanc's tech conference that 2027 will likely be "even tighter" than 2026, with structural supply constraints extending beyond next year as AI demand outpaces new capacity. Intel CEO Lip-Bu Tan separately floated memory-CPU stacking and new memory architecture, noting that memory makers are reportedly sold out for the next two years.

Micron Technology rose 6.17 percent to $919, Western Digital gained 8.75 percent to $457, Seagate Technology added 5 percent, and Kioxia's ADR climbed 4.86 percent. The Roundhill Memory ETF rose 8 percent to $55. The rally follows a report that Singapore's sovereign wealth fund Temasek plans direct investments in Samsung Electronics and SK Hynix, viewing the AI-semiconductor segment as undervalued.

The moves come as memory suppliers report being sold out for the next two years. Micron's fiscal Q4 2026 guidance calls for $50 billion plus or minus $1 billion in revenue and non-GAAP EPS of $31 plus or minus $1, with CEO Sanjay Mehrotra describing the outlook as reflecting "the strategic value of memory in the AI era."

Valuations Stay Modest Despite the Run

What stands out is how restrained valuations remain despite the sector's 2026 surge. SK Hynix trades at 19.51x trailing earnings, SanDisk at 18.57x, Western Digital at 19.03x, and Micron at 20.69x. The DRAM ETF sits at 24.92x. Those multiples reflect how much trailing earnings have expanded: Micron's fiscal Q3 2026 revenue jumped 345.7 percent year over year, SanDisk's Q4 FY2026 revenue rose 371.6 percent, and Western Digital's advanced 43.8 percent.

Margins tell the same story. Western Digital's non-GAAP gross margin reached 54.4 percent last quarter, and SanDisk's GAAP gross margin hit 84.6 percent. When earnings scale at that pace, headline P/E ratios lag the price action for months.

Nebius Backlog and Model Competition Add Fuel

A second driver arrived from Nebius Group, whose Q2 2026 revenue of $582.30 million beat estimates and climbed 454 percent year over year. The Amsterdam-based AI infrastructure company disclosed remaining performance obligations of $37.49 billion alongside H1 2026 capital expenditures of $8.13 billion — contracted backlog that shows hyperscalers and neoclouds are locking in multi-year GPU capacity, which requires proportional NAND, HBM, and enterprise SSD content. NBIS surged 34 percent to $259, and NVIDIA added 3 percent.

Competitive pressure among frontier model builders adds another tailwind. SpaceX's Grok 4.6 undercuts rival pricing at roughly $2 per 1 million input tokens versus Claude Opus 5 at $5 and GPT-5.6 Sol at $5. Cheaper, faster models expand inference volume, which pulls more HBM, DRAM, and NAND through the stack.

Product momentum reinforces the move. SanDisk and Kioxia introduced their 10th-generation QLC 3D NAND flash, achieving up to a 60 percent increase in bit density (exceeding 37 Gb/mm²) with a 4.8 Gb/s interface. SanDisk's Datacenter revenue climbed 437 percent for the full fiscal year.

Year-to-date, SanDisk is up 466.3 percent, Seagate is up 220 percent, and Micron is up 204 percent. The run cuts both ways: Chinese entrants like CXMT and YMTC are climbing the technology ladder, and memory remains a cyclical business. Prediction markets on Polymarket place a 50.5 percent probability on Micron closing above $900 by month-end.

The next hard data point is NVIDIA's earnings later this month, which the market treats as the master switch for AI-infrastructure sentiment. If hyperscaler capex commentary stays firm, memory should keep its bid. Micron's fiscal Q4 report follows, with management guiding to $50 billion plus or minus $1 billion in revenue and non-GAAP EPS of $31 plus or minus $1.

This article is for informational purposes only and does not constitute investment advice.