WDC, SNDK, STX Stocks Lead Memory Chip Dip Despite Soaring Prices: Is AI Rally Stalling?

Stocks moved lower in recent days.

• Over the past year, memory chip stocks have delivered unprecedented gains, fueled by supply shortages that have driven pricing sharply higher.
• SNDK, STX, WDC, and MU stocks pulled back from their record highs in recent days.
• Stocktwits sentiment for SanDisk, Western Digital and Seagate slips to ‘bearish.’

Even as memory chip prices continue to surge, the sharp rally in shares of their producers is beginning to show early signs of strain.  

Western Digital shares declined 8.2% on Tuesday, while Seagate shares dropped 6.8% and Micron shares dropped 2.7%. Shares of SanDisk, the top performer in the category and on the S&P 500, declined 7.2%. Each has posted declines in multiple sessions over the past seven days and has now retreated from its record highs.

As of late Monday, the Stocktwits sentiment was ‘neutral’ for Micron and ‘bearish’ for SanDisk, Western Digital, and Seagate.

Memory chip prices have been surging relentlessly amid a tight supply, which is expected to continue for the better part of the year, Bloomberg reported, citing experts and third-party data. Part of the reason is the burgeoning demand from the massive expansion of AI data centers.

Several companies, including Qualcomm and Honda, have flagged shortages of pressure memory chips and pricing pressures on their recent earnings calls. The issue has pressured businesses in the phone, PC, and auto-maker sectors.

“Memory prices have really moved from a background conversation to headlines this earnings season,” Charu Chanana, chief investment strategist at Saxo, was quoted as saying in the Bloomberg report. 

Vivian Pai, a fund manager at Fidelity International, said short supply is likely to persist beyond one or two quarters, which the industry has been predicting.

In recent weeks, analysts have sharply raised their price targets on the four major memory chip companies, without forecasting a stock downcycle.

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