Memory Chips Defy Wall Street Doubts, Micron Surges 9% in Biggest Gain in a Year

TradingKey - Against the backdrop of marginal easing in geopolitical risks and a recovery in risk appetite, the storage sector has seen a sentiment recovery rally, Micron (MU.US) saw its stock price surge nearly 8.9% on Wednesday, marking its largest single-day gain since April 9, 2025.

From the perspective of market drivers, this rally first originated from a decline in macro risk premiums. As signs of cooling appeared in the Middle East, the market's pricing of extreme scenarios was rapidly corrected, and capital flowed back into high-elasticity sectors. As a typical high-beta asset, memory has become a direct beneficiary of the recovery in risk appetite.

In tandem, Western Digital (WDC.US) , Seagate Technology (STX.US) and SanDisk (SNDK.US) recorded gains of approximately 8% to 10%, respectively. In Asian markets, Samsung Electronics and SK Hynix also rose significantly, indicating a global consensus among investors to increase positions in the storage sector.

Previously, Micron's stock price had fallen into technical bear market territory. Core market concerns were focused on two dimensions: first, the strong cyclical nature of the storage industry, and second, the historical erosion of profits by oversupply.

However, current data suggests that the supply-demand structure has changed significantly. Constrained by capital expenditure contractions and strengthened capacity discipline over the past two years, combined with the explosion in demand for AI servers and data centers, DRAM and NAND prices have entered an upward cycle. Industrial inventories continue to be depleted, and the industry is transitioning from "passive destocking" to "active restocking."

On the valuation front, Micron's current forward P/E ratio of less than 3.5x essentially reflects the market's deep skepticism about a cyclical reversal, rather than a denial of its profitability.

Evercore ISI analyst CJ Muse pointed out that management is highly confident that earnings per share will exceed $100 by 2027, and stated that this AI wave is a structural reshaping of the demand for High Bandwidth Memory (HBM) and high-performance storage.

This is the core of the current market divergence.

Some investors, still relying on historical experience, view this rally as a late-cycle rebound and fear that supply will eventually return to oversupply. Conversely, bullish capital is betting that "this time is different," as the rigid demand brought by AI and cloud computing is changing the industry's long-term supply-demand curve, transforming storage chips from cyclical assets into strategic resources.

In the long run, the explosive growth of the storage industry is deeply tied to AI demand. Over the next few years, AI development is likely to remain the primary theme, and the storage market may continue to be in a high-demand cycle for several years. By then, the profitability of the storage sector may be confirmed.