Memory Trade: Cyclical or Durable Growth?

D.A. Davidson's Gil Luria raised Micron's price target to $3,000, citing AI-driven memory demand and a December buyback. Micron's shares have risen 260% this year, with fiscal Q4 revenue at $54B, beating forecasts. The target assumes a 19x multiple on fiscal 2027 earnings, higher than current 6x. Other analysts' targets are lower, with an average near $1,560.

Micron (MU), SanDisk (SNDK), and SK Hynix shares fell in premarket trading due to strike risk at Micron's Taiwan plants, softer NAND prices, and Toshiba's HDD capacity expansion. Micron's Taiwan workers authorized a strike vote, while NAND wafer prices dropped 2.9% this week. Toshiba's $380M investment in HDD capacity is seen as a supply-side signal, impacting sentiment in the AI memory sector. The declines extend a correction that has erased 30% or more from the sector's summer peaks.

SanDisk (SNDK) forecasts Q1 2027 revenue of $10.3B-$10.8B, up from $8.97B in Q4 2026, citing higher storage sales and modest price increases. Adjusted earnings are expected to rise to $44-$46 per share from $39.25. Gross margin is projected at 83%-85%, slightly down from 84.6%. The stock remains in an uptrend, trading above its 50-day and 200-day moving averages. Data center sales, up 103% in Q4, could drive further growth.

Micron Technology (MU) stock rebounded 3.25% toward $1,100 after strong earnings but faces challenges due to softer margin guidance and supply constraints. D.A. Davidson raised its price target to $3,000, citing strong demand for memory chips. Micron reported Q4 revenue of $54.2B, EPS of $33.40, and Q1 revenue guidance of $60B-$63B, but gross margin guidance was below expectations.

Marvell Technology (MRVL) shares fell 2% in premarket trading after a 6% surge on Tuesday, when the company projected revenue could reach $90B by 2031. Analysts adjusted price targets, with Needham raising to $400 and Cantor Fitzgerald to $350. The company aims to capture AI and data center infrastructure spending, with a total addressable market of $400B by 2030. Marvell's stock has gained 240% in 2026, trading at a P/E of 89.8.

Memory stocks fell in premarket trading due to Toshiba's plan to expand hard-drive production, raising concerns about supply and pricing. Micron (MU) dropped 2%, SanDisk (SNDK) 2.18%, and SK Hynix (SKHY) 0.7%. Cantor Fitzgerald views the sell-off as overdone, citing strong demand and Toshiba's limited market share. Micron also faces potential strike action in Taiwan. Year-to-date gains for the stocks are 266.34%, 599.49%, and 8.66%, respectively.