Key Points
Micron Technology is benefiting from surging DRAM demand and prices, and is looking to lock in longer-term contracts.
Sandisk is the best pure play for the NAND cycle and has a big new opportunity with high bandwidth flash memory.
- 10 stocks we like better than Micron Technology ›
If you're looking to play the memory supercycle before it peaks, two of the best stocks to invest in are Micron Technology (NASDAQ: MU) and Sandisk (NASDAQ: SNDK). Let's look at what each of these AI stocks has to offer and why a small investment, like $1,000 in each, could make sense.
Image source: Getty Images.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
1. Micron
Micron is one of the three big producers of DRAM (dynamic random-access memory), along with Korean companies SK Hynix and Samsung. About 80% of its revenue comes from DRAM, and the rest from NAND (flash) memory.
The DRAM market is currently in short supply due to the rise of high bandwidth memory (HBM), a specialized form of DRAM. HBM demand is through the roof because, in order for graphics processing units (GPUs) and other AI chips to perform optimally, they need to be packaged with this type of memory.
Since HBM comes with strong unit economics, and demand is so high, it's not surprising that the big DRAM makers have turned most of their focus toward HBM production. This, in turn, has left the entire DRAM market undersupplied. Adding to the constraints is that HBM is much more complex to manufacture and requires upward of three times the wafer capacity as normal DRAM.
The result is that DRAM prices have skyrocketed. This has led to Micron's revenue surging and its gross margins rapidly expanding, as the company struggles to keep up with demand. Last quarter, its revenue climbed nearly threefold to $23.9 billion, while its gross margin jumped to 74.4%, up from 36.8% a year ago and 56% the prior quarter.
There is no sign of Micron's operational momentum slowing, with the company projecting gross margins to rise to 81% and issuing revenue guidance that blew past estimates. Analysts at Wedbush predict that DRAM prices will be up between 130% to 150% in the first half of the year compared to calendar fourth-quarter levels.
Despite these impressive results, Micron's stock is cheap, trading at a forward price-to-earnings ratio (P/E) of 4 times fiscal 2027 analyst estimates. The reason is that the memory market has historically been very cyclical, with big boom and bust stretches.
The construction of AI infrastructure appears to add a driver to the story, and Micron is beginning to seek longer contracts. It has already signed a five-year deal, which is a departure from its typical one-year agreements, and gives the company more visibility.
2. Sandisk
After being spun off from Western Digital, Sandisk is the only pure play in the current NAND supercycle. While DRAM is used for short-term memory applications because of its speed, NAND flash chips tend to be used for long-term storage. Like DRAM, NAND has been a notoriously cyclical business, and the industry found itself with negative gross margins just a few years ago following a pull-forward in electronics demand stemming from the pandemic.
This led many memory makers to cut flash memory production and turn their focus toward DRAM. Shortly afterward, though, the rise of AI led to soaring demand for huge high-performance solid-state drives (SSDs) that use NAND to store training data.
This has created a similar dynamic to DRAM, with demand rising and prices soaring. And given the strong unit economics of HBM, the big memory makers have not been in a rush to dramatically increase NAND capacity.
Last quarter, Sandisk saw its revenue climb 61%, led by a 76% jump in data center sales. Its gross margins rose from 32.3% last year to 50.9%, and management guided for revenue to nearly triple next quarter and for gross margins to expand to a range of 64.9% to 66.9%. Wedbush also noted that it sees a similar rise in NAND prices, as it does for DRAM prices, which points to stronger growth and margins ahead.
Sandisk trades at double the multiple of Micron at a forward P/E of 8 times fiscal 2027 estimates, but it is still not expensive. And the company could have a big opportunity with the introduction of a new technology called high bandwidth flash (HBF), which will sit between HBM and Software Design Document storage. This could be important for inference, and opens up a whole new opportunity.
Should you buy stock in Micron Technology right now?
Before you buy stock in Micron Technology, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Micron Technology wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $490,325!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,074,070!*
Now, it’s worth noting Stock Advisor’s total average return is 900% — a market-crushing outperformance compared to 184% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of March 26, 2026.
Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology and Western Digital. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
