Four Memory Stocks Surge This Year — Is It Still Not Too Late to Buy More?

Despite memory stocks having already accumulated staggering gains this year, Jim Cramer, renowned host of CNBC's financial program, believes that the tight supply-demand situation is far from over, thanks to the ongoing expansion of AI data centers and memory manufacturers no longer blindly increasing capacity. He sees further room for stock price appreciation.

The four companies highlighted by Cramer are Micron (MU-US), SanDisk (SNDK-US), Seagate Technology (STX-US), and Western Digital (WDC-US). Among them, he is most optimistic about Micron's growth potential and expects that, as long as data center investment does not significantly cool down, Micron's stock price could still double before this economic cycle concludes.

Cramer stated: "I admit I didn't position early, but I don't think it's too late now."

Memory Stocks Surge Amid Ongoing Supply-Demand Gap

Cramer's first reason for favoring the memory sector is the rapid expansion of AI data centers, which continues to drive demand for memory and storage devices, while existing supply capacity still struggles to fully meet market needs.

He cited Tesla (TSLA-US) CEO Elon Musk's earlier comment on social platform X, noting that memory has become one of the main bottlenecks facing data center expansion.

SanDisk has surged 490% year-to-date, Seagate up 214%, Micron up 198%, and Western Digital up 164%. Despite these substantial gains, Cramer believes that as long as AI infrastructure demand remains strong and memory supply stays constrained, there is still room for earnings upgrades among these companies.

Manufacturers Shift to Long-Term Contracts, Avoiding Blind Capacity Expansion

Beyond AI demand, the shift in memory manufacturers' business strategies is another key reason Cramer believes this cycle may differ from past ones.

In the past, whenever memory markets faced supply shortages and rising prices, manufacturers typically aggressively expanded capacity, eventually leading to oversupply, price collapses, and sharp declines in both profits and stock prices.

However, Cramer points out that manufacturers now increasingly lock in revenues through long-term customer contracts and then plan capacity based on confirmed demand, rather than blindly chasing shipment volumes or market share. In other words, companies are adopting a more "build-to-demand" model, helping to reduce the risk of uncontrolled capacity expansion.

Cash Redirected to Share Buybacks, Limiting New Capacity

Memory makers' capital allocation strategies are also shifting. Cramer notes that several companies are choosing to use cash for share buybacks rather than investing in new fabrication plants—returning value directly to shareholders and signaling that supply is unlikely to surge in the short term.

SanDisk currently has a $15.5 billion share buyback authorization; Seagate is executing a $5 billion buyback program launched last year; Western Digital earlier this year increased its buyback authorization by $4 billion.

Cramer emphasizes that these companies are returning capital to shareholders instead of building more capacity. With demand continuing to grow, this strategy could extend the period of tight supply in the memory market.

Cramer's Top Pick: Micron, Provided Data Center Investment Holds

Among the four stocks, Cramer favors Micron the most. His CNBC Investing Club's model portfolio recently established a new position in Micron, further reflecting his bullish stance.

The investment was made when Micron's stock pulled back alongside a correction in South Korean semiconductor stocks. Cramer believes that as long as AI data center construction does not slow significantly, Micron's stock still has the potential to double again before this memory boom ends.

However, he acknowledges this investment thesis is not without risk. If data center construction slows or major players like Samsung Electronics resume aggressive capacity expansion, the memory supply-demand balance could reverse.

Still, building a new semiconductor fab typically takes several years from planning to full production, so Cramer believes it is unlikely that a large volume of new capacity will suddenly flood the market in the foreseeable near term.

He stresses that investors who strictly apply the past memory industry cycle of "rising demand → expansion → oversupply → price collapse" may underestimate the structural changes brought by this wave of AI demand and manufacturers' capital discipline.

On Tuesday, memory stocks plunged across the board: SK Hynix ADR (SKHY-US) fell 9.20%, Seagate (STX-US) dropped 9.16%, SanDisk (SNDK-US) declined 9.01%; Western Digital (WDC-US) and Micron (MU-US) also fell 7.43% and 7.02%, respectively.