Sandisk Leads Memory Chip Rally as July Selloff Fades Into History

Those three words rolled into one heard throughout New York City sum up last month’s anxiety-driven selloff of memory chip stocks on Wall Street: Fuhgeddaboudit.

Memory chip makers surged Monday behind a wave of good news that rallied investor confidence in the artificial-intelligence boom. Companies that suddenly find themselves crucial to the supply chain, like the Bay Area’s Sandisk, are proving the biggest winners.

Overdrawn at the Memory Bank

Big Tech spending on AI, set to reach trillions of dollars, has stretched the supply of high-capacity memory chips to levels of exhaustion rivaling those of Salinger’s insomniac Holden Caulfield. Chipmakers are warning that advanced memory chips needed to run top AI models face years-long shortages. Demand has driven up prices and, in the process, made consumer goods like laptops and smartphones that also require memory more expensive. The crunch has bitten so hard that Apple is reportedly testing memory chips from blacklisted Chinese companies while appealing to Washington for a green light to buy them, in order to ease shortages and reduce pricing pressure.

On its face, that could be viewed as a negative for US memory chipmakers, but the past week has steered tailwinds in their favor. Commerce Secretary Howard Lutnick told The Wall Street Journal that the Trump administration is discouraging Apple from buying Chinese chips, telling the company there are “other solutions.” In another boost, Bloomberg reported leading AI lab Anthropic grew revenue more than 14 times year over year in the second quarter to more than $11.5 billion. This followed the major AI hyperscalers — Alphabet, Microsoft, Meta and Amazon — reaffirming their plans to spend hundreds of billions of dollars on AI-related capital expenditures in their latest earnings reports. For Sandisk, the news couldn’t have come at a better time:

• The memory chip maker last week reported a $94 billion customer backlog and forecasted 15% annual sales growth and an 80%-plus gross margin through the end of the decade. The company, which makes flash memory, is developing an alternative to the high-end DRAM market dominated by South Korea’s Samsung Electronics and SK Hynix and Idaho’s Micron Technology.
• Memory is historically a boom-and-bust business, but Sandisk’s report could signal a sea change. Bank of America analysts wrote the company’s outlook “suggests the industry may be entering a more durable phase” as large AI customers enter into long-term contracts.

Sandisk shares rose 8.9% on Monday and have added 44% in the past five trading days. According to Zacks Investment Research, the average analyst price target for the stock is $2,170.23, implying a 21% upside.

Good to Remember: Micron rose 4.1%, and two US data storage companies, San Jose’s Western Digital and California-based, Irish-domiciled Seagate, rose 5.3% and 2.2%, respectively, on Monday. They’re creating lasting memories for investors everywhere.