Two stocks have defined the market so far in 2026: Sandisk (SNDK +11.76%) and Micron (MU +11.85%). These two are leading the S&P 500 (^GSPC +0.86%) in performance and have been the stocks to own this year.
Micron is lagging a bit behind Sandisk, only rising 242% so far this year. Sandisk is leading the way at 635% growth, but that figure was more than 800% a few days ago before the most recent round of tech stock sell-offs.
These two are about as red-hot as it gets, yet they're each down around 20% from their all-time highs established just days ago.
If you missed out on these two, now could be your chance to buy them on sale, as the same catalysts that propelled their stocks higher in the first half of 2026 will remain present through the end of 2026 and into 2027.
Image source: Getty Images.
The memory chip market remains tight
Both Micron and Sandisk are memory chip fabricators. Memory chips are useful for information recall in computing devices. They are vital, whether it's in a GPU for data centers processing artificial intelligence (AI) workflows, a smartphone, or a laptop. Memory chips are used in everything.
While there are a few types of memory that are used in different situations, there isn't much that sets one manufacturer apart from another. As a result, the market is highly commoditized, making it highly sensitive to supply-and-demand dynamics.
NASDAQ: MU
Key Data Points
With unprecedented demand for memory chips coming from the data center build-out, the memory chip production industry wasn't ready for this massive spike. With high demand and low supply, prices skyrocketed, allowing Micron and Sandisk (and its peers) to benefit from soaring prices. That's the primary reason for its rise, but investors are likely concerned about demand dropping eventually.
That's a valid concern, but it may not be for a while. During Micron's recent earnings call, its management team said they expect "tight conditions" to persist in the DRAM and NAND memory markets beyond 2027.
The reason for that is two-fold: First, data center demand is rising because AI hyperscalers are far from done building out data centers. Second, many memory chip fabricators are scrambling to build new facilities to meet demand, and those aren't expected to come online until 2027 or later. Even then, it will remain unknown whether the new supply will be able to meet eventual data center demand, as it could still be a bottleneck.
NASDAQ: SNDK
Key Data Points
Regardless, the factors that caused these two stocks to skyrocket in 2026 will remain active over the next year and a half. That's plenty of time to make a solid return on investment from these two stocks, as another catalyst for their rise is still active.
The stocks appear cheap, as well
Because the memory chip market is commoditized and had relatively low growth, the market didn't value these stocks highly a year ago. Both Sandisk and Micron shares traded for as little as 1 to 2 times forward earnings at this time last year.
SNDK PE Ratio (Forward) data by YCharts
However, despite their massive run-up in recent months, the stocks still trade for less than 14 times forward earnings. For reference, the S&P 500 (^GSPC +0.86%) trades for about 21.7 times forward earnings. Compared to the broader stock market, Sandisk and Micron appear undervalued and could easily double from today's levels over the next year or so.
That makes them well worth considering as investments, but you'll need to stay on top of them, as any report that memory chip companies are losing their pricing power could be a major catalyst for the stock to sell off. I think we're still a few years away from that happening, making them solid stocks to buy now.
