Micron, SanDisk See Buying on Weakness as Wall Street Seeks Proof of Sustained High Prices

Micron Technology (MU-US) stock, which surged to astonishing highs over the past year, now faces more discerning and rational investors.

Shay Boloor, CEO and Chief Market Strategist at Futurum Equities, points out that, specifically, with the memory market facing "extremely high expectations," investors now require more evidence to prove that the upcoming two-year cycle can maintain a supply-demand imbalance.

Benefiting from extreme supply-demand imbalance, Micron and other memory and storage device companies have profited from soaring chip prices. However, Wall Street now wants to know if these chip prices can continue to rise before "customers start pushing back, supply gradually catches up with demand, or price momentum peaks."

Micron's stock has surged 230% year-to-date and approximately 650% over the past year. However, since hitting its high on June 25, Micron has pulled back around 23%. SanDisk (SNDK-US), which also hit a high on the same day, has pulled back 30%.

Micron's stock rose 1.1% on Wednesday to $948.80 per share, and SanDisk surged 6.8% to $1,727.18 per share.

Boloor states that the current market is seeing "oversold bounce" and "buying on weakness" primarily because earlier investors, concerned about the peak of the memory cycle being near, had already taken profits.

On the other hand, Jack Gold, Chief Analyst at J.Gold Associates, points out that Micron, SanDisk, SK Hynix, and Samsung Electronics are the main beneficiaries of the AI infrastructure boom driving high-priced memory demand. However, any signs of slowing in AI data center construction could significantly impact memory prices.

That said, he believes that, fundamentally, Micron will "fully benefit from the AI frenzy."

Gold says, "Unless the entire AI investment cycle collapses, I don't see any long-term reason why Micron won't continue to benefit. Therefore, as the stock price falls, I believe investors have an incentive to buy on weakness."