The AI boom is transforming the memory industry into one of the fastest-growing segments of the semiconductor sector.
Demand for high-bandwidth memory (HBM) and conventional DRAM, along with NAND chips used in AI servers has skyrocketed and pushed memory prices sharply higher. Market intelligence provider TrendForce estimates that conventional DRAM contract prices climbed roughly 93%–98% in Q1 2026 and projects a 58%–63% increase in Q2. NAND flash prices are also expected to remain strong.
The price surges come as the global memory supply struggles to keep pace with demand. Some industry experts expect the memory shortage to last beyond 2030.
Source: Micron Technology
Micron Technology, Inc. (NASDAQ:MU) and SanDisk Corporation (NASDAQ:SNDK) have emerged as two of the biggest beneficiaries of the memory shortage.
Micron and SanDisk Are Locking in Long-Term Supply Agreements
The memory market is notorious for its boom-and-bust cycles. In a bid to shield against the industry’s demand cycles and make future revenue more predictable, Micron and SanDisk are positioning their businesses around long-term supply agreements.
Micron Technology, Inc. (NASDAQ:MU) recently disclosed that it has signed 16 strategic customer agreements to lock in demand. With these deals, Micron’s remaining performance obligations jumped sharply from roughly $5 billion at the end of May to around $100 billion after including agreements signed following the quarter’s close.
SanDisk Corporation (NASDAQ:SNDK) is also pursuing the same strategy in the NAND flash memory market. The company has signed five multi-year supply agreements, including three contracts with minimum revenue commitments totaling $42 billion. These agreements are intended to stabilize pricing and strengthen long-term customer relationships.
How Micron Compares With SanDisk in Business Model and Stock Valuation
Micron Technology, Inc. (NASDAQ:MU) and SanDisk are both benefiting from the memory industry tailwinds, but their business models are positioned differently.
Micron has broader exposure across DRAM, NAND, and HBM markets. HBM has become one of the fastest-growing segments of the memory industry amid the AI infrastructure buildout. Micron has already sold out its HBM production for 2026. SanDisk, meanwhile, is primarily focused on NAND flash and enterprise storage markets.
In terms of valuation multiples, Micron trades at a forward price-to-earnings ratio of 5.95x, compared with 6.97x for SanDisk. Both memory stocks trade well below the S&P 500’s forward PE ratio of roughly 21%.
How Hedge Funds and Short Sellers View Micron and SanDisk
In a sign of growing investor confidence in the memory industry’s long-term outlook, more hedge funds moved into both Micron and SanDisk during Q1. Micron was in the portfolio of 154 hedge funds at the end of Q1, up from 137 in the previous quarter. SanDisk also attracted strong interest from hedge funds, with the stock’s hedge fund ownership climbing to 114 funds from 75.
Bearish positioning is modest in both memory stocks, but more cautious toward SanDisk. As of July 15, Micron’s short interest stood at 3.21%, representing 36.2 million shares with less than a day to cover. On the other hand, SanDisk’s short interest is at 5.32%, representing 7.9 million shares, also with less than a day to cover.
What Could Shape the Memory Industry’s Next Phase
The memory industry’s outlook is supported by surging investment in AI infrastructure. The leading tech companies are committing billions of dollars to expand AI data centers, and this is fueling unprecedented demand for advanced memory products.
The top 5 hyperscalers, a group that includes Microsoft, Amazon, and Alphabet, are on pace to spend $730 billion in AI infrastructure buildout in 2026. The spending is projected to surpass $1 trillion next year.
However, memory is one of the semiconductor industry’s most cyclical segments. This means that the pricing premium that memory companies currently enjoy can change quickly if supply catches up with demand.
In addition, tighter US restrictions on tech exports could limit sales opportunities in China. At the same time, Chinese memory manufacturers are expanding domestic production to reduce reliance on foreign suppliers.
Which Memory Stock Stands Out After the Recent Pullback?
Micron Technology, Inc. (NASDAQ:MU) shares are up roughly 728% over the past year, while SanDisk Corporation (NASDAQ:SNDK) shares have exploded more than 3,300% in the same period. However, both stocks have recently retreated from their peaks, with Micron pulling back around 20% and SanDisk falling roughly 30% over the past month. The pullback has some investors weighing whether to buy the dip in these memory stocks.
Both Micron and SanDisk are well-positioned to benefit from the AI-driven memory demand. The companies’ earnings visibility is strengthened by long-term supply agreements, strong pricing, and continued AI infrastructure buildout.
Overall, both the stocks offer exposure to the AI-driven memory boom. However, their differing portfolios, valuations, and risk profiles present differing risks and opportunities for investors.
While we acknowledge the risk and potential of MU and SNDK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MU and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None.
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