The memory-shortage thesis assumes AI usage and memory demand rise together. DeepSeek just supplied a reason that relationship may be weaker. Its September 10 release says V4.1-Flash needs one-quarter as much HBM and one-eighth as much SSD capacity for its KV cache as the previous generation. That matters to Micron Technology, Inc. (NASDAQ:MU) and Sandisk Corporation (NASDAQ:SNDK).
The qualification is essential. DeepSeek did not claim the entire model or data center uses 75% less HBM and 87.5% less SSD storage. The comparison covers KV cache, which stores attention state during inference, and it is against DeepSeek’s preceding architecture. It does not eliminate memory used for model weights or training. Still, inference is where sustained token growth can turn an architectural improvement into a demand shock.
Efficiency can stimulate use without preserving intensity
The bullish response is that lower memory cost makes tokens cheaper, stimulating more workloads. DeepSeek’s model has 552 billion parameters but activates 8 billion for input and 16 billion for output. If lower cost expands usage faster than memory needed per token falls, Micron can still sell more HBM and data-center DRAM, while Sandisk benefits from a larger installed base and broader storage needs beyond KV cache.
Recent results show why investors favor that outcome. Micron’s Cloud Memory revenue reached $13.77 billion in its latest quarter with an 83% gross margin, while Core Data Center revenue was $11.52 billion at an 87% margin. It also shipped more than $1 billion of HBM4. Sandisk’s quarterly data-center revenue rose 103% sequentially to $2.98 billion, and pricing generated roughly two-thirds of the company’s sequential revenue increase.
Those figures also expose the bear case. Extraordinary margins and pricing power embed scarcity. If model designers broadly cut bytes required per token, demand can grow rapidly without matching today’s memory-intensity forecasts. Sandisk is especially exposed to a reversal in pricing power because roughly two-thirds of its latest companywide sequential revenue increase came from higher pricing.
Insider Monkey’s hedge fund database counted 184 MU holders in Q2 2026 versus 154 in Q1; Coatue Management held 3,142,269 shares after lifting its position 1,794%. SNDK holders rose to 128 from 114. Blue Whale Capital held 97,653 shares in Q2 versus 114,605 in Q1. These are quarter-end snapshots, not reactions to DeepSeek’s release.
As of August 31, 5,996,105 SNDK shares were sold short, equal to 4.10% of float and 0.46 days of average volume. DeepSeek has not disproved the memory cycle. It has shown why unit efficiency belongs beside token growth in every demand forecast.
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