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Memory Stocks Are Losing Momentum Even as Fundamentals Stay “Absolutely Spectacular” — The Smart Money Is Moving On

by Team Lumida
August 21, 2026
in Markets
Reading Time: 5 mins read
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  • Sandisk Corp., Micron Technology, Western Digital, and Seagate Technology — which collectively surged hundreds of percent in 2025 and the first half of 2026 on AI-driven memory demand — have all given back significant ground from their peaks, with Sandisk and Western Digital down more than 30% and Seagate and Micron off roughly 20%, even as their forward earnings growth trajectories and balance sheets remain among the strongest in the technology sector.
  • “The smart money is moving on,” said Alec Young, chief investment strategist at MoneyFlows, noting that the stocks’ rapid surrender of their recent bounce reveals “a lot of weak hands” in the shareholder base — with momentum investors who had been feasting on memory stocks’ extraordinary returns (Sandisk surged 858% from January 1 through June 30, 2026, making it the most over-owned large-cap tech stock relative to its S&P 500 weight in Q2 according to Morgan Stanley) now rotating into speculative assets like Bitcoin and biotech names like Moderna.
  • The pullback is not about fundamentals: New Street Research upgraded Micron last week with a price target implying a $2-3 trillion market cap by decade-end (versus ~$1 trillion today); Sandisk gave bullish long-term financial targets at its investor day; and major AI hyperscalers including Microsoft, Amazon, Alphabet, and Meta remain committed to their capital expenditure plans — which, as they begin paying off in better revenue growth, may make the AI infrastructure buildout more durable than skeptics assumed.
  • The macro overhang is the problem: rising Treasury yields are a mechanical headwind for long-duration growth stocks whose valuations are based on multi-year earnings projections; elevated oil prices from the Iran-Hormuz conflict are stoking inflation concerns; and the increasingly circular nature of AI financing — where companies are investing in their own customers and vice versa — is raising questions about what happens to the whole structure if macro conditions deteriorate.

What Happened?

After an extraordinary run in which Sandisk surged 858% in the first half of 2026 alone (having risen 500%+ in 2025 and then another 143% in January 2026), the memory and storage stock cohort has stalled decisively. Sandisk and Western Digital are down more than 30% from their 2026 peaks; Seagate and Micron have retreated roughly 20%. The stocks are trading where they were in May — roughly flat for the past three months — despite continued bullish guidance from the companies themselves. At its investor day last week, Sandisk provided long-term financial targets that analysts described as bullish. New Street Research upgraded Micron to buy and set a price target corresponding to a $2-3 trillion market cap by decade-end. Bank of America named Micron one of its “select opportunities” following the selloff, calling the decline “an enhanced buying opportunity.” And the group trades at extraordinarily cheap multiples for their growth rates: Micron at 6.5x forward earnings and Sandisk at 7.3x are among the 10 cheapest stocks in the Nasdaq 100.

Why It Matters?

The memory stock divergence between fundamentals and price action is a real-time case study in how macro conditions can override company-specific investment theses. The fundamental bull case for AI memory is as strong as ever: demand for HBM (high-bandwidth memory) and NAND storage is structurally driven by the AI training and inference buildout, which hyperscalers have shown no sign of slowing. Micron’s and Sandisk’s revenue growth profiles and margin trajectories are, as Zacks’ Brian Mulberry put it, “absolutely spectacular.” But the macro environment has become a ceiling: rising Treasury yields are applying mechanical valuation compression to all long-duration growth assets, since higher discount rates reduce the present value of future earnings; the Iran-Hormuz conflict is keeping energy prices elevated and inflation worries alive; and the AI financing ecosystem’s increasingly circular nature — where companies like Microsoft invest in OpenAI which pays for Microsoft Azure which revenues fund more Microsoft investment in OpenAI — creates a potential contagion scenario if one link in the chain breaks under financial stress.

What’s Next?

The memory stocks’s path forward likely depends more on the macro environment than on their own operational performance. If Bessent’s bond buyback program succeeds in suppressing long-end yields, the mechanical valuation headwind for growth stocks eases and the memory cohort’s cheap multiples become more compelling to value-oriented investors who have been watching from the sidelines. If yields resume their climb despite the buyback intervention — validating JPMorgan’s credibility concerns — the sector may face continued multiple compression even as earnings grow. Dave Mazza of Roundhill Financial, which owns stakes in all four names, captured the opportunity he sees in the current setup: “The sector is still trading on positioning while fundamentals keep getting stronger underneath. When momentum stalled, the selling fed on itself through profit taking, leveraged unwinds and repositioning. In my opinion, that is very different from the market marking down the fundamentals, which have only improved.”

Source: Bloomberg

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Lumida's website (referred to herein as the "Website") is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of the Website on the Internet should not be construed by any client and/or prospective client Lumida’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.

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