Micron and Sandisk Shares Are Crashing. Is It Time to Buy the Dip?

Key Points:

• Micron Technology and Sandisk stocks surged dramatically in the first half of 2023, rising 304% and 858% respectively, driven by strong demand and soaring prices in the memory chip market fueled by the AI boom.
• Since July, both stocks have experienced significant declines—Micron down 26% and Sandisk down 40%—amid fears of overbuilding AI computing capacity, although company management disputes these concerns.
• Both companies benefit from a tight memory chip supply expected to last beyond 2027, supporting long-term growth prospects as demand for DRAM and NAND memory in data centers and AI infrastructure remains robust.
• Despite recent sell-offs, Micron and Sandisk are trading at forward earnings multiples well below the S&P 500 average, indicating potential upside if the memory chip market continues to expand.
• Investors should consider buying on the dip but remain vigilant about market conditions, as memory chip prices are cyclical and any significant price drops could negatively impact these stocks.