U.S. memory and storage stocks followed their South Korean peers sharply lower in Tuesday’s trading action, raising questions about the nature of the selloff.
Major U.S. indexes fell broadly on Tuesday, with investor concerns about a prolonged conflict in Iran — but the tech sector saw outsized losses, and memory and storage stocks were among the weakest daily performers in that bunch.
Micron Technology’s stock ended the day down 8% on Tuesday, while Sandisk’s was down 8.7%, Seagate Technology’s was off 5.8% and Western Digital’s was down 7.2%. Those moves were admittedly not as dramatic as the respective 11.5% and 9.8% drops experienced by shares of SK Hynix and Samsung Electronics in South Korea.
“Major selling in Asia in these sectors centered on memory winners like Samsung & Hynix is something to watch as to the impact on U.S. names that are very well-owned,” Mizuho trading-desk analyst Jordan Klein wrote in a note to clients on Tuesday.
But he thought the extreme daily declines for Samsung and SK Hynix shares reflected more that South Korean stocks had become “massively overbought.” In other words, the move wasn’t “a new negative indicator on fundamentals.”
Micron said Tuesday it made progress with a form of low-power server memory as it recently started shipping samples of what it calls “the industry’s highest-capacity LPDRAM module.”
“This milestone represents a transformational step forward for AI data centers, delivering low-power memory capacity that can unlock new system architectures,” the company said in a statement.
Elsewhere, UBS analyst Timothy Arcuri expressed a highly upbeat view of Micron’s profit prospects. He thinks earnings per share for the next calendar year could “approach” $85. That’s well above the FactSet consensus of near $48.
As memory supply tightens from AI-driven demand, memory-chip makers like Micron have raised prices for components.
Arcuri said Micron is likely leveraging that dynamic for new long-term agreements, though “that would concede some near-term pricing upside.” Still, those agreements should support “more sustainable revenue and earnings over the next few years,” he said.
The pricing dynamics for dynamic random-access memory and NAND are “strengthening,” Arcuri said, and supply shortages could last through 2028.
While memory makers have been reluctant to add capacity due to fears that demand will eventually slow, Arcuri said that they are also having trouble doing so due to a shortage of clean-room space to manufacture more supply. The companies must also contend with long lead times for chip-making equipment and a lack of engineers to install and qualify tools.
“This is leading to a situation where the vast majority of all new capacity will be fully allocated to HBM,” Arcuri said, referring to high-bandwidth memory that is made by stacking DRAM. Chip makers like Nvidia need HBM for advanced AI chips. That, in turn, is expected to drive “severe shortages” of other types of memory, he added.
Seagate announced on Tuesday that its next-generation Mozaic 4+ heat-assisted magnetic recording-based storage platform is qualified and in production with two major hyperscaler customers. The platform can support up to 44 terabytes of capacity, and is a key part of the company’s roadmap toward hard drives of up to 100 terabytes.
The AI data-center build-out has driven great demand for hard drives like Seagate’s for storing vast amounts of training data for AI models, and for managing AI-generated content that has grown beyond text to include images and videos.
By increasing the amount of capacity per disk, Seagate can offer more storage with improved energy efficiency and a lower total cost of ownership, Seagate Chief Commercial Officer B.S. Teh told MarketWatch.
When talking to its hyperscaler customers, Teh said “every conversation seems to point to higher demand than the previous conversation.” More importantly, however, he said the supply-and-demand dynamics have changed customers’ planning cycles.
“In the past, we would be working with them on a much shorter time frame in terms of forecast and demand,” he said. “Today, we’re talking about multi-year cycles.”
Teh said that’s been helpful for both customers and Seagate for laying out future needs rather than focusing on immediate requirements.
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