Why Memory Stocks Have Fallen for Four Months While Profits Hit Records

Wall Street’s story about memory chips is that the boom has peaked, so investors are selling the stocks before the profits turn. The Wall Street Journal’s James Mackintosh laid out the case in May, and on Friday Bank of America cut its Sandisk price target, citing concerns about late-cycle valuations, according to Stocktwits (via Yahoo Finance) and Invezz.

That same day Sandisk (SNDK) plunged 13.5%, a day after it reported record revenue, and Micron (MU) slid 5.3%.

Since their June peaks, Micron has lost 27.1%, and Sandisk, Western Digital (WDC) and Seagate (STX) have each lost between 41% and 51%, according to our price data.

The story in one sentence

“As with all commodities, success sows the seeds of its own destruction — even if AI hopes are fulfilled,” James Mackintosh, The Wall Street Journal’s Streetwise columnist, wrote on 16 May.

Pzena Investment Management, a value-fund manager, laid out the chain in May. A memory maker’s costs barely move in the short run, so when prices rise nearly every extra dollar becomes gross profit, and margins that high have historically brought new supply and weaker demand, then a price collapse. Investors who remember past cycles try to sell before that shows up, while the reported numbers are still climbing.

The evidence for it

1. Price increases are slowing

TrendForce forecast on 30 September that contract prices for conventional DRAM would rise 10% to 15% this quarter from the last, with enterprise SSDs the only category where increases would speed up.

The companies’ guidance says the same. Sandisk’s forecast implies revenue growth of about 12% this quarter, after 23% in the last one, and Micron guided its gross margin slightly lower.

2. High prices are starting to cut demand

Lip-Bu Tan, chief executive of Intel (INTC), said customers had begun signaling a PC slowdown because of memory prices and availability, Yahoo Finance reported on Friday, and Intel’s finance chief expects that slowdown to last at least through the first half of 2027, according to its results release. Samsung’s own phone business swung to an operating loss of 600 billion won last quarter as memory and other parts got pricier, the Korea JoongAng Daily reported.

3. Micron and Sandisk peaked in June, before their record quarters

Micron’s stock hit its closing high on 25 June, the day after it reported fiscal third-quarter results, according to its SEC filings and our price data. It has since posted record quarterly revenue of $54.23 billion, and the stock has fallen 27.1%.

Sandisk’s revenue rose 378% from a year earlier in the quarter it reported on Thursday, yet its stock has lost half its value since its own 25 June closing high.

4. Seoul sold the news of SK hynix’s record listing

Memory stocks fell into a bear market in early July, more than 20% below their highs, just as Samsung’s record quarterly profit failed to impress investors, Yahoo Finance reported on 7 July.

SK hynix’s $26.5 billion Nasdaq listing began trading on 10 July, Renaissance Capital and IPOScoop reported, and on Seoul’s next session, 13 July, the KOSPI plunged 8.95%. The Korea Times cited “sell-the-news” profit-taking and worries that the memory cycle was nearing a peak.

5. In October, even record profits couldn’t stop the slide

SK hynix fell about 26% in the five days to 15 October on worries about CXMT, China’s leading memory maker, and a possible glut in 2029, CNBC reported. Samsung’s shares then slid 4.13% on 29 October after another record quarterly profit, CNBC and the Korea JoongAng Daily reported.

The case against it

The doubters are the memory makers themselves and Nvidia (NVDA), which buys their memory for its AI chips. SK hynix said on 28 October that demand will exceed supply through 2030, and Nvidia’s chief executive, Jensen Huang, said in an interview that CNBC reported on 22 October that he doesn’t expect a memory oversupply until after 2029.

1. Contracts lock in much of 2027 and 2028. SK hynix’s long-term agreements with 14 major customers cover more than half of its planned capacity for both years, according to its results release and TrendForce. Samsung said its entire 2027 capacity for HBM, the stacked memory used in AI chips, is already booked, the Korea JoongAng Daily reported.
2. Prices are still rising. TrendForce expects DRAM and NAND contract prices to keep climbing this quarter, and Micron guided revenue to about $61.5 billion for its current quarter, up from $54.23 billion.
3. Even the bearish forecasts leave prices high. Counterpoint Research expects DRAM prices to fall about 23% in 2028, but that would still leave them about 230% above 2025 levels, CNBC reported.

The strongest is the first: the contracts are in the companies’ own results, not in a forecast.

What would change minds

• Monday 2 November: Samsung and SK hynix trade in Seoul for the first time since Friday’s US chip selloff. Another drop after record quarters would fit the peak story.
• Wednesday 4 November: Qualcomm (QCOM) and Arm (ARM) report after the close. Qualcomm’s chief executive blamed a difficult memory and supply environment for a drop in phone-chip sales last quarter; a deeper warning would show high prices cutting demand, as the bears expect.
• December: Micron reports its fiscal first quarter (it reported the same quarter on 17 December last year). A second guide for a lower gross margin would support the peak story; a guide back above this quarter’s level would undercut it.

The stocks exposed

If the peak story holds, the memory makers have the most to lose. If it breaks and prices keep climbing, the pain lands on the companies that buy memory.

Our read

Partly supported. The market’s behavior fits the peak story, and so does the slowdown in price increases: Micron’s margin guide has turned down and Sandisk expects slower growth.

The weakest link is the turn itself. Prices are still rising and contracts cover more than half of SK hynix’s output for 2027 and 2028, so the fall in profits that these stocks are pricing in hasn’t started. The number we’ll watch is Micron’s gross-margin guide in December.