Micron and SanDisk, 1 share-price surge and memory demand
Micron and SanDisk shares over the past 1 years, respectively, rose 860%4,160%. The analysis did not consider the stocks overvalued at present, citing strong demand and supply constraints as the backdrop, and identifying the cyclical nature of the memory market as the biggest risk.
Micron and SanDisk shares over the past 1 years, respectively, rose 860%4,160%. Such gains are rarely seen over a short period. The rapid rise in share prices has drawn intense investor attention.
Some market participants raised concerns about a bubble. The same article assessed that it was difficult to conclude that the two stocks were currently overvalued. The assessment was based mainly on the outlook for supply and demand.
The two companies are direct beneficiaries of rising demand for DRAM and NAND used in data centers. The article noted that orders are increasing as demand for server memory and high-performance storage expands. This demand is linked to the expansion of artificial intelligence and cloud services.
Supply is expected to remain constrained for the time being. Expanding production capacity and bringing in equipment are processes that take time. The article also noted that these supply constraints are affecting prices and shipment volumes.
The main risk is the cyclical nature of the memory market. It noted that prices and demand could come under downward pressure quickly once the current boom ends. Cyclicality directly affects the company's performance and share price.
The article said investors should closely monitor quarterly results and data center order trends. It noted that assessments may change if performance and demand indicators shift. It also said investment decisions should be reviewed in light of the relevant figures and announcements.
Sources: The Motley Fool
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