Micron and Sandisk pop as memory demand to remain high through 2030

Shares of memory companies Micron and Sandisk continued their long sell-off, rising on Monday after Melius Research said demand could remain high through the end of the decade.

Memory companies are profiting greatly from a global shortage of microchips to power artificial intelligence. High Bandwidth Memory, or HBM, connects directly to the most advanced graphics processing units. Nvidia And Advanced Micro Devices it powers nearly every major AI data center.

Melius analyst Ben Reitzes raised his buy rating on Monday, saying it could rise another 41% in the next 12 months. The stock is up more than 550% in the past year after gaining 5.6% on Monday.

““The market will eventually be willing to pay more for the extraordinary durability of margins and demand profiles that AI enables,” Reitzes wrote, adding that he expects Nvidia to invest more in memory soon. “We’re only in the early stages of this AI cycle, and the need for memory has never been stronger.”

Micron is trading at record highs and its market cap is approaching $600 billion.

Sandisk gained 8.1 percent on Monday and is up more than 3,000 percent in the past year, pushing its market value to more than $157 billion. Reitzes predicted the stock will rise another 36% over the next 12 months.

““The numbers speak for themselves,” said Bernstein analyst Mark Newman, who has a buy recommendation on Sandisk. “Earnings revisions are significantly approaching and that’s driven by very, very strong memory prices.”

HBM consists of general-purpose memory stacks known as Dynamic Random Access Memory, or DRAM, that provide fast, temporary data storage so the GPU can run parallel tasks.

The world’s top memory manufacturers Micron, Samsung and SK Hynix have largely used DRAM resources to make HBM. The result is a general-purpose memory shortage that is causing prices to skyrocket. Accordingly data According to information from Counterpoint Research, the DRAM market grew by 30% compared to the previous quarter for two consecutive periods, driven by increasing memory prices.

This means consumers are paying more for electronic products. Gartner’s guess PC prices will increase by 17 percent this year. Solid-state drives used inside PCs now cost two or three times What did they do in December?

Sandisk is a major manufacturer of solid-state drives based on what is known as NAND memory, a type of flash memory that stores data even when the devices are turned off. NAND is experiencing a similar increase in demand as AI servers require increasing amounts of data storage.

Market conditions are forcing memory buyers into longer contracts of three or even five years. SK Hynix and Micron said hyperscalers are more willing to sign long-term supply agreements to stay ahead in the competition to secure enough memory. For example, chip design firm Broadcom has locked in memory supply until 2028.

“Memory generators are also willing to go longer term because they want to get more reliable demand, especially if they are looking to add capacity,” Newman said. he said, adding that it took about two and a half years to build new factories before production could start.

Micron is spending $24 billion to massively expand its NAND manufacturing facility in Singapore and is also building massive new chip factories in the US in New York and Idaho. SK Hynix broke ground on its first U.S. memory packaging facility in Indiana and is expanding production and packaging with new facilities in South Korea.

Sandisk will report quarterly results next week.

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