3 Stocks That Get Paid More When Memory Prices Rise. I'd Buy Only 1 of Them.

Memory chip prices set records this year, and they are still climbing. Research firm TrendForce said in early July that contract prices for both DRAM and NAND flash memory were already at all-time highs, and it expected more increases in the third quarter.

For most of the technology industry, those prices are a cost. But the companies that make memory collect them instead. In its latest reported quarter, Micron Technology (NASDAQ:MU) shipped only a low-single-digit percentage more DRAM than in the prior quarter -- and revenue from those chips still rose 67%.

Micron, flash-memory specialist Sandisk (NASDAQ:SNDK), and DRAM giant SK Hynix (NASDAQ:SKHY) all get paid more for roughly the same output when prices rise. Each one's latest results show how much of the growth is price. And price, of course, is the part that can go away.

Image source: Micron.

1. Micron: price is doing the work

Micron's fiscal third quarter of 2026, which ended May 28, produced revenue of $41.5 billion, up 74% from the fiscal second quarter's $23.9 billion.

In its quarterly filing, the company attributed the DRAM jump primarily to average selling prices, which rose in the low-60% range sequentially, while bit shipments (the industry's measure of volume) grew only a low-single-digit percentage. NAND sales nearly doubled the same way, mostly on price. Higher prices carry almost no added production cost, so they flow nearly straight into profit. Micron's gross margin was 84.6% in the quarter, and management guided the just-ended fiscal fourth quarter to about 86%, on revenue near $50 billion -- about 21% above the third quarter. Growth is decelerating, in other words, even as the dollars climb.

Micron has also signed multi-year take-or-pay agreements, which obligate customers to pay for set volumes even if they don't take them. Its filing says most of those deals carry fixed pricing or price floors and ceilings.

That should soften the next downturn. I doubt it would prevent one, though. Memory prices collapsed in fiscal 2023, and Micron's revenue that year was cut in half, to $15.5 billion, with the year ending in a $5.83 billion net loss.

2. Sandisk: one product, one price

Sandisk makes NAND flash memory (the chips that store data rather than process it) and nothing else, so its results move with a single market's price.

In the company's fiscal fourth quarter, which ended July 3, revenue came in at $8.97 billion, 51% more than the quarter before. Management said about two-thirds of that growth came from higher pricing. A year earlier, quarterly revenue was $1.9 billion.

The margin swing shows what price alone can do. Gross margin hit 84.6%, up from 26.2% a year earlier. For fiscal 2025 as a whole, it was 30.1%.

Sandisk has since signed long-term supply agreements backed by financial guarantees. However, those deals haven't been through a falling market yet.

3. SK Hynix: the biggest earner

SK Hynix, the second-largest DRAM maker by revenue, reported the biggest quarter of the three in late July. Second-quarter revenue came to about 79 trillion Korean won, up 257% from the year-ago period. Operating profit climbed 557% year over year, to about 60.5 trillion won -- a 76% operating margin, an extraordinarily high level for a manufacturer. The company said price increases, led by high-performance memory for artificial intelligence (AI) servers, drove the record.

That single quarter brought in more revenue than the company's entire 2023 total of about 33 trillion won, a year when falling memory prices produced a 7.7 trillion won operating loss. Notably, SK Hynix has also locked in long-term agreements with around 10 customers.

Which one would I buy?

All three get paid more when memory prices rise. And all three trade as if those prices will fall.

Micron costs about 7 times what analysts forecast it will earn in fiscal 2027, which began this month. Sandisk trades at about 9 times its fiscal 2027 earnings forecast, and SK Hynix at about 6 times expected 2027 earnings.

Sure, the boom could keep going. After all, record prices haven't slowed AI data center demand yet. But memory prices move in cycles, and all three businesses feel them directly.

If I were buying one of the three today, it would be SK Hynix. It's the cheapest of the three against 2027 earnings forecasts, for what is arguably a very similar bet.

Micron has executed about as well as a memory company can, but at about $1,100 per share as of this writing, I think a new buyer is counting on the boom to hold. And Sandisk's profits are the most price-sensitive of the three. I'd personally watch it from the sidelines until its contracts have been through a downturn.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.