Micron has become a standout favorite as memory chip prices continue to soar as tech companies scramble to secure supplies amid shortages.
Stocks rose again on Monday, even as the broader market was depressed by rising energy prices and concerns about renewed fighting between the United States and Iran.
Micron stock rose 9% in morning trading as the S&P 500 index was unchanged. Rising oil prices meant there were few green stocks outside of chip and energy stocks. Intel rose more than 6% and Qualcomm rose more than 12%, with both stocks evenly splitting their initial gains.
Micron stock has risen in 11 of the past 15 sessions. The stock price has more than doubled since the end of March.
Micron since the beginning of the year
Driving this seemingly unstoppable trend is the idea that a surge in AI demand and memory scarcity could lead to “windfall profits” across the sector.
“A surge in demand for AI accelerators and inference hardware could dramatically boost earnings for semiconductor companies. If adoption exceeds expectations, chipmakers in memory, logic and networking could see a windfall,” Jay Goldberg, an analyst at Seaport Research Partners, wrote in a note Wednesday.
super cycle
There is growing talk among analysts that the sector’s supercycle could last until the end of next year, as chip makers ramp up production capacity and consider deals with customers to increase supply.
In the short term, technology companies will deal with higher input costs due to the shortage. During quarterly earnings calls last month, multiple tech executives from the big four hyperscalers pointed to this pressure point in their companies’ supply chains.
So profit expectations for the chipmaking sector are widening, with Micron, SanDisk and Broadcom all expecting gross margins to exceed 75% in 2026, according to FactSet.
Round Hill Memory ETF since its debut
A potential supercycle is separating the chip manufacturing sector from the rest of the market. While major stock indexes were mostly flat on Friday, Round Hill Memory ETF DRAM rose about 13%.
There is high enthusiasm for memory chip stocks among individual investors. Micron was one of the “most hyped stocks on social media,” as noted in comments by JPMorgan analyst Arun Jain and others on May 7.
The performance of South Korean chip makers, which produce most of the world’s memory components, has been particularly sharp.
SK Hynix rose more than 11% and Samsung Electronics rose more than 6% in Monday trading, according to FactSet.
