Western Digital (WDC +4.22%) took off like a rocket today, surging 15.8% through 12:25 p.m. ET after CNBC reported on surging prices for computer memory chips needed to support artificial intelligence services.
Arch-rival Micron (MU +4.87%) stock is also up strongly today, albeit its 6%-ish gain lags Western Digital's significantly.
Image source: Getty Images.
What CNBC says about DRAM
According to CNBC, computer memory prices, particularly the price of DRAM memory, "surged in 2025 and are likely to increase further in 2026 as demand for these chips which are crucial for AI continues to rise." CNBC predicts a further 40% rise in DRAM prices this year.
South Korea's SK Hynix and Samsung Electronics, and Micron are the biggest producers of DRAM, whereas Western Digital does not produce DRAM, focusing its efforts on solid-state NAND and hard disk drives (HDD) for memory instead. But here's the thing:
If DRAM prices rise, AI companies that need memory may seek cheaper alternatives, such as HDDs, instead -- and that could be excellent news for Western Digital stock.
NASDAQ: WDC
Key Data Points
Is Western Digital stock a buy?
This has not gone unnoticed among investors, and WD stock nearly tripled last year because of it. But here's where the bull argument for Western Digital stock starts to fall apart:
Priced north of 26 times trailing earnings, analysts forecast 21% long-term earnings growth for Western Digital stock. That gives the shares a PEG ratio of 1.2 -- not expensive, but not nearly as cheap as Micron stock, which costs 30 times earnings but has a 52% projected earnings growth rate.
Slightly more expensive on the surface, Micron stock at a PEG ratio of 0.6 seems a compelling bargain compared to Western Digital. I'd buy the former and sell the latter.
Thanks to today's surge, you'll get a great price for it.
