Micron Technology (MU +5.63%) and Sandisk (SNDK +15.00%) have been up and down stocks. While they were incredible investments at the start of 2026, these two stocks are now trading down 25% to 42%, respectively, from their 2026 highs. However, I think they're both ready for a rebound and could easily end the year strongly.
The reality is that memory chips are in short supply, and prices continue to rise. This reality won't wrap up for years, making these two stocks excellent investments to consider in both 2026 and 2027.
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Top AI companies are pointing fingers at the memory chip industry
If you haven't priced a new computer over the past year, you may be oblivious to the fact that memory chip prices are soaring. There are two primary types of memory, NAND and DRAM. Both components are in short supply due to the artificial intelligence (AI) build-out, which is consuming nearly all available supply. When demand is high and supply is low, prices skyrocket, which is why consumer hardware is also being affected by this.
NASDAQ: MU
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Consumers aren't the only ones affected, as several major AI players are also pointing the blame at memory chips.
Amazon (AMZN -0.33%) recently raised its capital expenditure guidance from $200 billion in 2026 to $220 billion, all because of rising memory chip prices. Alphabet (GOOG +0.39%) (GOOGL +0.71%) increased its capital expenditure figure by a similar amount, but didn't call out memory chips by name. Space Exploration Technologies (SPCX -2.57%) CEO Elon Musk called out memory chips on the company's conference call, claiming the industry is increasing capacity by only about 20% per year. In comparison, demand has increased by 200%.
NASDAQ: SNDK
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These are major players in the industry discussing the memory chip crisis, and companies like Sandisk and Micron are working on massively increasing capacity by building new facilities, but that takes time. Those facilities won't be online until later in 2027 or 2028, so current market conditions with rampant demand will persist, potentially driving up prices even more over the next year. This will add more fuel to the memory chip market fire, and Micron and Sandisk will be in a prime position to benefit.
The future looks bright for Micron and Sandisk
Over the next year, both Micron and Sandisk's revenue and earnings are expected to soar. Sandisk just started its fiscal 2027 in July, and Wall Street expects it to deliver 140% growth during FY 2027, with earnings per share (EPS) projected to rise from $70.88 to $212.15. Micron is just wrapping up its fiscal 2026 and will start fiscal 2027 in September. For FY 2027, Wall Street anticipates 85% growth, with EPS forecast to increase to $154.89 from $73.39.
These are huge increases and show that both stocks are far from done growing. Yet, the market doesn't set much of a premium on them.
Data by YCharts.
That's because the market is worried about what memory chip prices will look like once more capacity is added to the industry. The assumption is that prices could tank, but if memory is in short supply, the rest of the AI ecosystem may go into extreme build-out mode once memory capacity has right-sized itself to demand, keeping prices fairly elevated but consuming all available demand. If that's the case, then these two could be in a prime position to skyrocket over the next year and a half.
Right now, the market is assuming the worst-case scenario for these two. Rarely does that occur, and I think skepticism about the longevity of these two stocks is a great reason to buy the stocks now. There is still clearly a massive runway for AI growth, which will use a lot of memory chips.
