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AI Memory Chip Selloff Looks Overblown: 2 Stocks to Buy on the Dip
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Key Takeaways
Micron & Sandisk offer buying opportunities despite a memory stock sell-off fueled by China's CXMT advances.
MU's strong HBM demand, rising NAND sales and long-term customer agreements support its AI-driven growth.
SNDK's AI storage demand and $93.9B in long-term agreements strengthen its revenue visibility.
Memory stocks are facing fresh selling pressure since Monday as investors question the sustainability of artificial intelligence (AI)-related spending and worry about rising competition. The latest trigger came from China’s ChangXin Memory Technologies, which reported progress over the weekend on a new DRAM architecture that it claims could boost memory density by 30-50%, allowing more data to be stored in the same physical space.
The market reaction has been sharp. Per CNBC, SK Hynix and Samsung Electronics dropped more than 10% and 7%, respectively, yesterday in Seoul. Both touched their lowest levels since August.
In the United States, MicronTechnology (MU - Free Report) , SandiskCorporation (SNDK - Free Report) , SeagateTechnology Holdings (STX - Free Report) and Western Digital Corporation (WDC - Free Report) have also come under pressure. Over the past two trading sessions, shares of Micron, Sandisk, Seagate and Western Digital fell 4.4%, 6.2%, 4.5% and 4.1%, respectively, reflecting growing nervousness across the memory sector. Investors were already worried about how AI spending is being financed, so the CXMT news landed on a fragile market.
However, the sell-off may be getting ahead of itself. Although CXMT’s technological progress could intensify competition over time, the company still needs to prove that it can manufacture its chips at scale. Legacy memory makers still hold a technological lead over CXMT.
For investors, this pullback could present an opportunity rather than a reason to panic. Micron and Sandisk are worth buying now on the recent dip, as both are set to benefit from continued demand for memory and storage driven by AI infrastructure.
Let’s assess why these two stocks still offer attractive opportunities despite the recent volatility.
Micron
Micron closed fiscal 2026 on a strong note, with record revenues, high margins and strong cash generation. The outlook is even more striking. The company expects fiscal first-quarter 2027 revenues of $61.5 billion (plus or minus $1.5 billion) and adjusted earnings of $38.15 per share (plus or minus $1), implying roughly 351% revenue growth and 698% earnings growth from a year ago.
HBM revenues grew faster than Micron’s total revenues in the fiscal fourth quarter, and the company has already contracted most of its 2027 HBM supply at significantly higher prices. Its HBM4 ramp is progressing, and it is working with NVIDIA on a custom HBM4E solution. NAND is a second engine, with data center SSD revenues approaching $10 billion in the fiscal fourth quarter, more than 10 times the year-earlier level, as uses like KV-cache offload widen demand for fast storage. Further out, autonomous vehicles and humanoid robots should need far more memory and storage than today’s devices.
Micron is also trying to make this boom more durable. It has signed 26 Strategic Customer Agreements, which are expected to account for more than 35% of revenues through 2030. Customer financial commitments have risen to $32 billion, mostly as cash deposits. That could soften the industry’s usual boom-and-bust swings. New capacity is coming from the United States, Singapore, Japan and Taiwan, with Singapore HBM packaging due to start in early 2027 and the ID1 fab in mid-2027. Risks remain, including heavy capital spending and slower price increases, but fundamentals suggest that the long-term story is intact.
MU currently sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of A.
Micron Technology, Inc. Price, Consensus and EPS Surprise
Sandisk has become one of the biggest winners of the AI memory boom, and since its separation from Western Digital it offers a more direct way to invest in demand for NAND flash and data storage. The reason lies in how AI is changing storage needs. As inference and agentic AI generate more data that must be stored, retrieved and served with low delay, NAND is becoming central to architectures built around KV cache and RAG. Sandisk is scaling its datacenter business accordingly, widening its enterprise SSD range and moving toward QLC products. It now expects 2026 datacenter exabyte growth in the mid-70% range. It believes demand keeps rising on a rolling basis, and sees the enterprise datacenter flash market reaching about 1.2 zettabytes by 2030.
What sets Sandisk apart is its effort to escape NAND’s usual swings in spot prices. Its eight New Business Model agreements are expected to cover more than half of its bits in fiscal 2027 and roughly two-thirds in fiscal 2028. At floor pricing, the signed deals represent at least $93.9 billion in revenues.
For fiscal first-quarter 2027, Sandisk expects revenues of $10.3 billion to $10.8 billion, up from $8.97 billion recorded in the last reported quarter. With multi-year agreements providing visibility and AI inference driving storage demand, the company looks well placed for the years ahead.
SNDK currently sports a Zacks Rank #1 and has a VGM Score of A.
Sandisk Corporation Price, Consensus and EPS Surprise
View the Zacks #1 Rank List
Image: Bigstock
AI Memory Chip Selloff Looks Overblown: 2 Stocks to Buy on the Dip
Key Takeaways
Memory stocks are facing fresh selling pressure since Monday as investors question the sustainability of artificial intelligence (AI)-related spending and worry about rising competition. The latest trigger came from China’s ChangXin Memory Technologies, which reported progress over the weekend on a new DRAM architecture that it claims could boost memory density by 30-50%, allowing more data to be stored in the same physical space.
The market reaction has been sharp. Per CNBC, SK Hynix and Samsung Electronics dropped more than 10% and 7%, respectively, yesterday in Seoul. Both touched their lowest levels since August.
In the United States, Micron Technology (MU - Free Report) , Sandisk Corporation (SNDK - Free Report) , Seagate Technology Holdings (STX - Free Report) and Western Digital Corporation (WDC - Free Report) have also come under pressure. Over the past two trading sessions, shares of Micron, Sandisk, Seagate and Western Digital fell 4.4%, 6.2%, 4.5% and 4.1%, respectively, reflecting growing nervousness across the memory sector. Investors were already worried about how AI spending is being financed, so the CXMT news landed on a fragile market.
However, the sell-off may be getting ahead of itself. Although CXMT’s technological progress could intensify competition over time, the company still needs to prove that it can manufacture its chips at scale. Legacy memory makers still hold a technological lead over CXMT.
For investors, this pullback could present an opportunity rather than a reason to panic. Micron and Sandisk are worth buying now on the recent dip, as both are set to benefit from continued demand for memory and storage driven by AI infrastructure.
Let’s assess why these two stocks still offer attractive opportunities despite the recent volatility.
Micron
Micron closed fiscal 2026 on a strong note, with record revenues, high margins and strong cash generation. The outlook is even more striking. The company expects fiscal first-quarter 2027 revenues of $61.5 billion (plus or minus $1.5 billion) and adjusted earnings of $38.15 per share (plus or minus $1), implying roughly 351% revenue growth and 698% earnings growth from a year ago.
HBM revenues grew faster than Micron’s total revenues in the fiscal fourth quarter, and the company has already contracted most of its 2027 HBM supply at significantly higher prices. Its HBM4 ramp is progressing, and it is working with NVIDIA on a custom HBM4E solution. NAND is a second engine, with data center SSD revenues approaching $10 billion in the fiscal fourth quarter, more than 10 times the year-earlier level, as uses like KV-cache offload widen demand for fast storage. Further out, autonomous vehicles and humanoid robots should need far more memory and storage than today’s devices.
Micron is also trying to make this boom more durable. It has signed 26 Strategic Customer Agreements, which are expected to account for more than 35% of revenues through 2030. Customer financial commitments have risen to $32 billion, mostly as cash deposits. That could soften the industry’s usual boom-and-bust swings. New capacity is coming from the United States, Singapore, Japan and Taiwan, with Singapore HBM packaging due to start in early 2027 and the ID1 fab in mid-2027. Risks remain, including heavy capital spending and slower price increases, but fundamentals suggest that the long-term story is intact.
MU currently sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of A.
Micron Technology, Inc. Price, Consensus and EPS Surprise
Micron Technology, Inc. price-consensus-eps-surprise-chart | Micron Technology, Inc. Quote
Sandisk
Sandisk has become one of the biggest winners of the AI memory boom, and since its separation from Western Digital it offers a more direct way to invest in demand for NAND flash and data storage. The reason lies in how AI is changing storage needs. As inference and agentic AI generate more data that must be stored, retrieved and served with low delay, NAND is becoming central to architectures built around KV cache and RAG. Sandisk is scaling its datacenter business accordingly, widening its enterprise SSD range and moving toward QLC products. It now expects 2026 datacenter exabyte growth in the mid-70% range. It believes demand keeps rising on a rolling basis, and sees the enterprise datacenter flash market reaching about 1.2 zettabytes by 2030.
What sets Sandisk apart is its effort to escape NAND’s usual swings in spot prices. Its eight New Business Model agreements are expected to cover more than half of its bits in fiscal 2027 and roughly two-thirds in fiscal 2028. At floor pricing, the signed deals represent at least $93.9 billion in revenues.
For fiscal first-quarter 2027, Sandisk expects revenues of $10.3 billion to $10.8 billion, up from $8.97 billion recorded in the last reported quarter. With multi-year agreements providing visibility and AI inference driving storage demand, the company looks well placed for the years ahead.
SNDK currently sports a Zacks Rank #1 and has a VGM Score of A.
Sandisk Corporation Price, Consensus and EPS Surprise
Sandisk Corporation price-consensus-eps-surprise-chart | Sandisk Corporation Quote