Memory chips are becoming one of the strongest-performing segments in this AI rally. Micron shares rose more than 4% on Wednesday, approaching $1,088, after a brokerage firm raised its price target directly from $2,100 to $3,000 while maintaining its Buy rating. The performance stood out on a day when the broader market fell and chip stocks generally pulled back.
The brokerage firm's thesis has two parts. First, tight memory supply could persist through 2028, and Micron's long-term supply agreements with tech giants are still expanding. Second, the market will gradually come to see that Micron is no longer a traditional “cyclical stock,” but an AI-driven growth stock whose valuation could rise from the low multiples of the past to around 20 times earnings. Demand from AI servers for high-bandwidth memory and DRAM is at the heart of this valuation reassessment.
On the same day, SanDisk also rose by more than 4%, with its share price nearing $1,729. The reason is that NAND flash memory prices have continued to climb, and industry insiders expect contract prices in the fourth quarter to rise another 15% to 20%. AI inference and data centers are shifting more and more workloads to solid-state drives, and demand for enterprise SSDs is strong.
However, Micron also has a risk that needs attention: at its key factory in Taiwan, the union among nearly 2,000 voting members obtained strike authorization with a 99% approval rate. Mediation between the two sides regarding bonuses and profit-sharing has already failed. If a strike does occur, it could affect production capacity in the short term. But from another perspective, tighter supply could further push up storage prices.
My view: Storage is one of the most elastic parts of the AI compute capacity chain. Once a price-increase cycle starts, the surge in earnings and share prices often exceeds expectations. But it’s important to stay clear-headed: storage has always been a strong cyclical industry. Historically, each round of price hikes has encouraged capacity expansion, and the cycle ultimately ends with a price drop. Now that the stock price has already priced in fairly optimistic expectations, the risk-reward ratio of chasing after the rise is declining. It’s more suitable to gradually add positions on pullbacks and closely monitor changes in contract prices.
The above information is for reference only and does not constitute investment advice.