Key Points
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AI memory stocks have been some of the biggest gainers in the technology sector this year.
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Accelerating investment in AI infrastructure should continue to be a tailwind for Micron and Sandisk in particular.
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While both Micron and Sandisk have gone parabolic this year, each stock carries a favorable setup for further gains.
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As July begins, Sandisk (NASDAQ: SNDK) and Micron Technology (NASDAQ: MU) both stand out among memory semiconductor stocks with potential for sharp stock appreciation. Three distinct but interconnected developments are unfolding as earnings season comes into focus, reinforcing structural demand for AI memory and storage products.
These factors — rooted in industry supply dynamics, corporate investment decisions, and sustained hyperscaler infrastructure spending — create a favorable setup for Micron and Sandisk.
1. SK Hynix is going public on the Nasdaq on July 10
On July 10, SK Hynix is scheduled to list on the Nasdaq through an initial public offering (IPO) of American depositary receipts (ADRs). The offering involves issuing approximately 17.9 million new shares targeting gross proceeds of roughly $28 billion. SK Hynix will use the capital to fund aggressive expansion efforts in high-bandwidth memory (HBM) and advanced packaging technologies critical for AI accelerators.
Listing on a major U.S. exchange brings heightened visibility and liquidity to one of the world’s leading memory producers. Positive market reception for SK Hynix’s debut will likely lift sentiment across the entire AI memory ecosystem, including direct peers such as Micron and suppliers of complementary NAND storage solutions like Sandisk. A successful offering should help reduce perceived risks around cyclicality in the memory sector, potentially drawing incremental capital flows into related names.
2. Trillions of dollars are pouring into memory capacity
A number of memory manufacturers recently announced commitments to large-scale expansions, reflecting optimism in sustained AI-driven demand.
In late June, the South Korean government announced that Samsung Electronics and SK Hynix will invest a combined $520 billion to construct four new memory fabrication plants in the southwestern region of the country. This initiative stems from a longer-term plan in which Samsung and SK Hynix plan to invest $2 trillion across related megaprojects.
Meanwhile, Micron recently broke ground on a $9 billion expansion of its facility in western Japan. The project targets to ramp production of high-bandwidth memory (HBM) chips as demand continues to skyrocket. Additionally, Micron is investing $200 billion for new fabs in the states of New York, Idaho, and Virginia.
I see these coordinated investments as evidence of a robust, multiyear demand cycle for AI memory. New capacity requires years to come online, meaning near-term shortages for dynamic random-access memory (DRAM), NAND, and HBM are likely to persist. For Micron, these expansions directly enhance its ability to capture additional HBM and DRAM share in ongoing hyperscale data center build-outs. For Sandisk, broader industry capacity growth should support stable pricing and volume in enterprise NAND flash storage.
3. Watch for capex plans as earnings season approaches
Earnings season is fast approaching. As usual, the spotlight on the technology sector will focus primarily on capital expenditure (capex) plans from the hyperscalers. The dominant theme over the last couple of years has been accelerating AI infrastructure spending by Amazon, Microsoft, Alphabet, and Meta Platforms. This trajectory is expected to continue because products ranging from graphics processing units (GPUs), application-specific integrated circuits (ASICs), memory and storage, networking equipment, and high-capacity switches have become central to big tech’s competitive positioning and long-term AI strategy.
AMZN Capital Expenditures (TTM) data by YCharts.
Since the hyperscalers face intense pressure to deliver more capable AI services to their customers, delaying or scaling back growth roadmaps risks ceding ground in a market where first-mover advantages in model performance and inference efficiency translate directly into revenue and profits. As a result, I think capex guidance will likely remain elevated or potentially increase, sustaining demand for related HBM, DRAM, and NAND offerings.
These growth tailwinds mitigate the cyclical narrative for memory and storage stocks
The three catalysts discussed above converge to create a compelling setup for Micron and Sandisk. The SK Hynix listing validates the memory sector’s growth narrative and will likely attract newfound attention. The synchronized capacity expansions demonstrate that industry leaders are confident in sustained demand over the coming years and are strategically positioning supply. Lastly, expanding hyperscaler AI capex budgets provides a floor supporting the shift in memory consumption from primarily consumer-driven cycles toward enterprise AI infrastructure.
As of this writing (July 6), Micron and Sandisk are the top-two performing stocks in the Nasdaq-100 this year. While both stocks have risen sharply, Micron trades at a modest forward price-to-earnings (P/E) multiple of 6.4, while Sandisk’s forward P/E is a bit richer at 26.7. Nevertheless, both multiples are muted when compared to peak levels that other leading AI chip stocks witnessed throughout the AI revolution.
This setup favors continued upside for Micron and Sandisk in the near term, while the underlying tailwinds appear more durable than traditional memory cycles. As a result, I think this leaves room for further valuation expansion in AI memory stocks as these catalysts continue to materialize throughout the AI infrastructure era.
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Adam Spatacco has positions in Alphabet, Amazon, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Micron Technology, and Microsoft. The Motley Fool has a disclosure policy.
