Memory stocks including Micron Technology (MU), SanDisk (SNDK), and Western Digital (WDC) posted sharp gains on Tuesday, marking the second consecutive day of recovery. SanDisk rose 14.3%, Western Digital climbed 12.5%, and Micron gained 12.2%, emerging as the top three performers in the S&P 500 index. The rally followed recent losses driven by a tech sector rotation and concerns over demand sparked by low-cost Chinese AI models. The Roundhill Memory ETF (DRAM) rose 10.9%, its strongest single-day move in over a month, while the iShares Semiconductor ETF (SOXX) gained 5.5%. The rebound has injected fresh confidence into the semiconductor trade ahead of second-quarter tech earnings reports starting Wednesday with Alphabet.
Memory Stocks Post Double-Digit Gains on Tuesday
SanDisk stock rose 14.3% on Tuesday, while Western Digital and Micron Technology rose 12.5% and 12.2% respectively, to emerge as the top three gainers in the S&P 500 index. The Roundhill Memory ETF (DRAM) rose 10.9%, its best single-day move in over a month. Chipmaker Intel rose 8.6% ahead of its earnings report Thursday. The iShares Semiconductor ETF (SOXX) rose 5.5%, also the best move in over a month.
Semiconductor shares continued gains in the overnight session, boosted by strong preliminary results from Super Micro Computer. The AI server seller said it received a record $60 billion in new orders in its fiscal fourth quarter and expects gross margins to rise sharply higher than its own projections.
China's Kimi K3 AI Model Launch Pressured Chip Stocks Last Week
Chip stocks had been under pressure lately as investors fret about low-cost Chinese AI models. Last week, China's Moonshot AI released Kimi K3, an open-source model that its maker claims matches leading closed U.S. models despite being developed with far fewer financial and computing resources.
The launch reignited debate over whether rival AI developers are over spending on infrastructure, and whether the success of more compute-efficient models could curb demand for the high-end chips powering companies such as Anthropic and OpenAI.
Stocktwits Poll Shows 53% Believe Memory Selloff Has Ended
About 53% of nearly 3,000 voters in an ongoing Stocktwits poll believe the selloff in memory stocks has largely run its course. Twenty-four percent believe the weakness might persist, while 23% voted that it is too early to tell.
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"What we witnessed was the overleveraged get washed out. Institutions got to buy at a discount. Now, those that waited and bought the dips will be rewarded.. Fundamentals haven't changed at all. Tale as old as time," a trader wrote in the comments.
Another trader presented a cautionary view, citing looming market risks from the U.S.-Iran war and a potential interest rate hike.
On Stocktwits, the retail sentiment was 'bullish' for MU and SNDK, and 'bearish' for WDC and DRAM — unchanged from the previous day.
Bank of America Raises Micron Price Target to $1,550
On Tuesday, Bank of America named Micron as one of its best investment ideas, and raised its price target on the stock to $1,550 from $1,500 while reiterating its 'Buy' rating. Analyst Vivek Arya framed the recent chip pullback as a "summer reset" rather than a fundamental reversal. The target implies a 60% upside from MU's closing price on Tuesday.
"$MU can absolutely deliver the $400 Billion in FCF that UBS cited this week. Demand, margin profile, and sustained capex buildout are the setup. Futurum Equities reiterates its buy and $1,550 PT," The Futurum Group CEO Daniel Newman said in an X post.
With the gains so far this week, Micron has climbed over 240% year to date, while SanDisk is up 570%.
FAQ
What caused memory stocks to rise sharply on Tuesday?
Memory stocks rose sharply on Tuesday as part of a two-day rebound following recent losses driven by tech sector rotation and concerns over low-cost Chinese AI models. SanDisk rose 14.3%, Western Digital gained 12.5%, and Micron climbed 12.2%, emerging as the top three performers in the S&P 500 index.
What do retail traders think about the memory stock selloff?
According to a Stocktwits poll of nearly 3,000 voters, 53% believe the selloff in memory stocks has largely run its course, 24% believe the weakness might persist, and 23% voted that it is too early to tell. On Stocktwits, retail sentiment was 'bullish' for MU and SNDK, and 'bearish' for WDC and DRAM.
What is Bank of America's price target for Micron?
On Tuesday, Bank of America raised its price target on Micron to $1,550 from $1,500 while reiterating its 'Buy' rating. The target implies a 60% upside from Micron's closing price on Tuesday. Analyst Vivek Arya framed the recent chip pullback as a "summer reset" rather than a fundamental reversal.
