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Micron has become a standout favorite during the ongoing memory chip rally as tech companies scramble to secure supply amid shortages.
The stock is up yet again on Monday even as the overall market is sagging on rising energy prices and concerns of renewed fighting between the US and Iran.
Shares of Micron were up 9% in morning trading as the S&P 500 was unchanged. There was very little green on the board besides chip stocks and energy stocks because of a rise in oil. Intel was up more than 6% and Qualcomm was up more than 12% before both stocks pared initial gains.
Micron shares are up 11 of the last 15 sessions. Since the end of March the shares have more than doubled.
Micron, YTD
Driving the seeming unstoppable trend is the belief that soaring AI demand coupled with a memory shortage could could lead to “windfall gains” across the sector.
“Surging demand for AI accelerators and inference hardware can dramatically boost revenue for semiconductor firms. If adoption outpaces forecasts, chipmakers across memory, logic, and networking could see windfall gains,” analyst Jay Goldberg at Seaport Research Partners wrote in a Wednesday note.
Supercycle
Analysts are increasingly talking about a supercycle in the sector that could last beyond the end of next year as chipmakers are considering deals with their customers to build more capacity and boost supply.
In the near term, tech companies are dealing with increased input costs from the shortages. During quarterly earnings calls last month, multiple tech executives from the big four hyperscalers noted this pressure point in their supply chains.
Accordingly, profit expectations in the chipmaking sector are growing wider, with Micron, SanDisk and Broadcom all projecting gross margins above 75% for 2026, according to FactSet.
Roundhill Memory ETF since debut
The potential supercycle is detaching the chipmaking sector from the rest of the market. Major equity indices were mostly flat on Friday while the Roundhill memory ETF DRAM was up about 13%.
Enthusiasm for memory chip stocks is high among retail investors. Micron was among the “most hyped stocks on social media” noted in a May 7 commentary from JPMorgan analyst Arun Jain and colleagues.
Chipmakers in South Korea, which produces most of the world’s memory components, are riding especially high.
SK Hynix rose more than 11% and Samsung Electronics rose more than 6% in trading on Monday, according FactSet.
