Shares of Micron Technology and Sandisk fell sharply Wednesday as investors rotated out of the broader semiconductor sector amid growing concerns over valuations.
Micron dropped 8%, Sandisk slumped 10%, and Western Digital fell 7% as memory stocks pulled back alongside the Nasdaq composite index.
The selloff was fueled in part by concerns over additional manufacturing capacity planned in South Korea, raising fears the cyclical memory-chip industry could swing toward oversupply.
Stretched valuations and profit-taking added further pressure to the sector, even as analysts continue to forecast healthy long-term demand driven by AI infrastructure spending.
A California class action filed last week alleges Samsung, SK Hynix, and Micron illegally coordinated to restrict DRAM supply and inflate prices, which have reportedly risen 700% over four years.
Those are allegations, not findings, but the lawsuit has weighed on trade sentiment across the memory chip space in recent sessions.
Citrini Research separately warned that memory prices have risen so sharply that large buyers, including major PC OEMs, hyperscalers, and Nvidia server partners, may be forced to reduce their memory needs over time.
Despite the near-term turbulence, persistent supply shortages driven by AI infrastructure needs are broadly expected to last until 2027, which analysts say should limit the depth of any sustained losses.
The CEO of Synopsys noted that most memory chips from the world’s top manufacturers are “going directly to AI infrastructure, but many other products also require memory, so these other markets are now struggling due to insufficient capacity.”
The Synopsys chief also emphasized that the chip “shortage” will persist into 2026 and 2027, reinforcing the view that supply constraints remain a structural feature of the current market cycle.
Demand for server DRAM and High Bandwidth Memory to build AI data centers has already outstripped the demand of the entire broader market, making a swift supply resolution unlikely before the second half of 2027.
Micron reported fiscal third-quarter 2026 revenue of $41.46 billion, up 346% year over year, with non-GAAP earnings per share of $25.11 beating the consensus estimate of $20.28.
The company’s fourth-quarter guidance calls for revenue of $50 billion and non-GAAP EPS of $31 at the midpoint, signaling continued confidence in robust demand conditions ahead.
Sandisk, identified as the S&P 500’s top 2026 performer, continues to benefit from acute NAND supply shortages and strong data center demand across its customer base.
The company posted third-quarter revenue of $5.95 billion, exceeding expectations, bolstered by a strategic shift toward multi-year, fixed-price contracts under its New Business Model framework.
Analysts broadly cautioned against reading too much into a single-session pullback, noting the longer-term memory supercycle thesis remains intact despite Wednesday’s sharp declines.
