Key Points
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SK Hynix’s leadership team expects the boom phase of this memory supercycle to last through 2030.
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Sandisk has long-term sales agreements with hyperscalers booked out through 2030.
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Both stocks are trading below 10 times earnings.
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The memory chip boom has been helping lift the whole market over the past two years, as memory stocks have enjoyed massive gains.
Demand from data center operators for memory chips and storage devices has far outpaced supply. This is due to the pace at which hyperscalers and others are building new data centers and the infrastructure to power AI computing. AI workloads require processors to handle massive volumes of data quickly, so those servers need more memory to store and rapidly retrieve all that data.
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The result has been a supercycle for memory makers. Though they are all building new production lines to increase supply (and their sales volumes), so far, supply has not caught up with demand. As such, the memory-chip and storage device makers enjoy incredible pricing power, and they’ve been taking full advantage.
This supercycle has been going on for about two years now, and some believe it could last another two years, or more. Eventually, the supply will catch up with demand as these companies churn out more chips and the infrastructure boom flattens. At some point, supply will once again exceed demand significantly, and prices will start to sink again. But most experts believe the shortage will last through 2028, potentially into 2029, and perhaps beyond.
One of the biggest names in the memory space is Micron Technology (NASDAQ: MU), but there are two other great AI memory chip stocks powering the AI memory boom that deserve your attention.
1. SK Hynix
Just three companies dominate the globe in the design and manufacture of high bandwidth memory (HBM) chips for data centers and high-performance computing: Micron, SK Hynix (NASDAQ: SKHY), and Samsung.
SK Hynix and Samsung are based in South Korea, but the former cross-listed on the Nasdaq on July 10, so U.S. investors can now easily buy its shares.
SK Hynix is actually the dominant player in the HBM chip market, with a 50% global market share by revenue. Last week, it released its third-quarter results, and the numbers showed that the supercycle is not slowing down.
It generated record revenue of 104.6 trillion South Korean won, which translates to roughly $78 billion. That was up 32% from Q2 and 348% year over year. Its operating profit was 83.3 trillion won, or $62.5 billion. That was up 38% from Q2 and 638% year over year. Its operating margin rose to 80% from 76% the previous quarter and from 47% in the prior-year period.
Further, management said it expects demand to outpace supply through 2030, meaning this supercycle could last another four years, at least. It is in the process of ramping up capacity to meet that demand. It also has signed 14 long-term agreements (so far) with major customers that, at present, account for 50% of total production capacity for 2027 and 2028.
The U.S. stock price is down about 9% since July, a decline that coincided with broader negative sentiment toward tech stocks due to their high valuations and massive AI capital expenditures. But that just creates an incredible opportunity for investors. SK Hynix stock is trading at 9 times earnings and 3 times forward earnings, and it has a price/earnings-to-growth (PEG) ratio of just 0.1, which indicates it’s a long-term value.
2. Sandisk
Sandisk (NASDAQ: SNDK) may be the stock that has benefited the most from this memory and storage supercycle. Since it was spun off from Western Digital (NASDAQ: WDC) in February 2025, Sandisk stock has returned a staggering 3,000% or roughly 641% on an average annualized basis. It has returned 372% year to date and is trading at $1,122 per share.
Sandisk sits on the longer-term storage side of the equation, as its solid-state and NAND flash drives store data for AI data centers and AI computing. Those storage products are experiencing the same supply-and-demand imbalance as memory chips.
Sandisk released its fiscal 2027 Q1 earnings last week. For the period, which ended Oct. 2, revenue rose 23% sequentially and 378% year over year to $11 billion, while earnings soared 20% from fiscal 2026 Q4 to $52.60 per share.
Sandisk anticipates a 40% increase in bit demand in calendar 2027. Also, through its new business model framework, it has inked numerous long-term sales agreements with hyperscalers out to 2030 with commitments for 50% of its bits for fiscal 2027 and two-thirds for fiscal 2028.
In addition, it announced that on Nov. 19, it will conduct an 8-for-1 stock split to make its shares more accessible to investors. That would bring the share price down to around $140 per share.
Finally, Sandisk stock, like SK Hynix, is cheap, trading at just 9 times trailing earnings and 5 times forward earnings.
A $5,000 investment in these two AI memory and storage juggernauts would not be a bad play based on their earnings power, low valuations, and the data center industry’s insatiable demand for their technologies.
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Dave Kovaleski has positions in Micron Technology. The Motley Fool has positions in and recommends Micron Technology and Western Digital. The Motley Fool has a disclosure policy.
