Micron shares are rising again despite weak overall market. Why memory chip rally seems unstoppable
Stick Pictures | Light Rocket | Getty Images
Micron has emerged as a standout favorite in the ongoing memory chip rally as tech companies scramble to secure supplies amid shortages.
Stocks rose again on Monday, even though the market was generally down due to rising energy prices and concerns about renewed fighting between the United States and Iran.
Micron shares were up 9% in morning trading as the S&P 500 was unchanged. There was little green on the board besides chip stocks and energy stocks due to the rise in oil. Intel rose more than 6% and Qualcomm rose more than 12% before both stocks lost their initial gains.
Micron shares have risen in 11 of the last 15 sessions. Shares have more than doubled since the end of March.
Micron, YTD
The driving force behind this seemingly unstoppable trend is the belief that increasing demand for artificial intelligence, combined with a lack of memory, could lead to “windfalls” in the industry.
“Rising demand for AI accelerators and inference hardware could significantly boost revenue for semiconductor firms. If adoption outpaces forecasts, chipmakers in memory, logic and networking could see windfall gains,” analyst Jay Goldberg of Seaport Research Partners wrote in a note Wednesday.
Super Bike
Analysts are increasingly talking The industry supercycle could continue until the end of next year as chipmakers consider making deals with customers to create more capacity and increase supply.
In the near term, technology companies will face rising input costs resulting from shortages. On last month’s quarterly earnings calls, multiple technology executives from the four major hyperscalers recognized this pressure point in their supply chains.
Accordingly, profit prospects in the chipmaking industry are expanding, with Micron, SanDisk and Broadcom forecasting gross margins of over 75% for 2026, according to FactSet.
Roundhill Memory ETF since its debut
The potential supercycle separates the chipmaking industry from the rest of the market. While major stock indexes were mostly flat on Friday, the Roundhill memory ETF DRAM was up about 13%.
Enthusiasm for memory chip stocks is high among retail investors. Micron is among the “most overhyped stocks on social media,” JPMorgan analyst Arun Jain and colleagues said in a May 7 commentary.
Chip manufacturers in South Korea, which produces most of the world’s memory components, rank particularly high.
SK Hynix rose more than 11% and Samsung Electronics rose more than 6% in Monday trading, according to FactSet.
