Memory stocks including Micron Technology Inc. (MU), SK Hynix Inc. (SKHY), Seagate Technology Holdings (STX), and Western Digital Corp. (WDC) fell on Friday, declining between 3% and 7%. The Roundhill Memory ETF (DRAM) was down nearly 7%, while the iShares Semiconductor ETF (SOXX) dropped over 2%. Gabelli Funds Portfolio Manager John Belton attributed the selloff in part to rising Middle East tensions and risk-off sentiment from Iran war escalation. Evercore Senior Managing Director Amit Daryanani stated the memory supply-demand imbalance is worsening and will extend beyond the memory sector. The memory sector has seen strong year-to-date performance, with DRAM more than doubling and SOXX surging nearly 74%, as AI infrastructure demand creates bottlenecks in data storage and movement.
Memory Stocks Decline 3-7% on Friday Amid Sector Selloff
Memory stocks fell on Friday, trimming this week's gains. Shares of Micron Technology Inc., SK Hynix Inc., Seagate Technology Holdings, Western Digital Corp., SanDisk Corp., and others in the sector declined between 3% and 7%. The Roundhill Memory ETF (DRAM), which has more than doubled year-to-date, was down nearly 7% at the time of writing. The iShares Semiconductor ETF (SOXX), which surged nearly 74% during this period, was down over 2%.
Evercore's Daryanani Forecasts Worsening Supply-Demand Imbalance Through 2027
Evercore Senior Managing Director Amit Daryanani struck an optimistic note during an interview with CNBC on Friday. Daryanani stated the supply-demand imbalance in the memory sector is only going to get worse next year. "If anything, we think it's going to start extending beyond memory to other parts of the ecosystem," he added. The analyst said the memory bottleneck is only going to become more prominent as AI development transitions from training to inference, where serving models at scale requires moving and storing vast amounts of data for millions of user queries rather than simply maximizing compute performance. "We think the supply-demand imbalance is getting bigger, which means these stocks are all going to prove to be much more durable... these multiples keep grinding higher," he added. Daryanani also stated that decommoditization in the hardware stack is ongoing, with enterprises increasingly investing in infrastructure as they work to integrate AI into their workflows. "It is a lot cheaper for enterprises to run open source models on-prem versus using frontier models for everything," he said.
Middle East Tensions Drive Risk-Off Sentiment in Technology Stocks
Gabelli Funds Portfolio Manager John Belton said during a CNBC interview that the selloff in technology stocks on Friday is in part due to the rising tensions in the Middle East. Belton stated there is a risk-off sentiment in the markets currently, with the Iran war escalation contributing to it. "Fundamentally, what we're seeing from the tech sector has generally been more of the same over the last two weeks as what we've seen to start the year," he said, while highlighting encouraging revenue trends from frontier AI developers OpenAI and Anthropic. He also pointed to hyperscalers' steadily rising capital spending, noting that the companies supplying AI infrastructure have generally outperformed the firms making those investments. "What we learned from Google this week is that it seems very clear... next year is going to be another massive year of capex," he said, while adding that there is nothing right now that indicates that this capex cycle is slowing down.
Morgan Stanley Identifies Buying Opportunity in Memory Stock Selloff
According to a report by Investing.com, Morgan Stanley stated in a note earlier this week that the selloff in memory stocks creates a compelling entry point for investors. The firm added that while the memory sector does not yet offer the best risk-to-reward ratio in its coverage, it is catching up fast. Morgan Stanley stated that memory has increasingly become the bottleneck in the AI sector. The firm also said memory shortages are worsening, noting that data center memory prices have climbed 25% in the third quarter (Q3), beating its own estimates. The Invesco QQQ Trust (QQQ) is up 21% over the past 12 months, while the iShares U.S. Technology ETF (IYW) is up 32%.
FAQ
What caused memory stocks to fall on Friday?
Memory stocks including Micron Technology Inc. (MU), SK Hynix Inc. (SKHY), Seagate Technology Holdings (STX), and Western Digital Corp. (WDC) declined between 3% and 7% on Friday. Gabelli Funds Portfolio Manager John Belton attributed the selloff in part to rising Middle East tensions and risk-off sentiment from Iran war escalation.
Why does Evercore's Daryanani believe the memory supply-demand imbalance will worsen through 2027?
Evercore Senior Managing Director Amit Daryanani stated during a CNBC interview that the memory bottleneck is becoming more prominent as AI development transitions from training to inference. He said serving models at scale requires moving and storing vast amounts of data for millions of user queries, and the supply-demand imbalance is getting bigger, extending beyond memory to other parts of the ecosystem.
What is Morgan Stanley's view on the recent memory stock selloff?
According to a report by Investing.com, Morgan Stanley stated in a note earlier this week that the selloff in memory stocks creates a compelling entry point for investors. The firm noted that memory has increasingly become the bottleneck in the AI sector, and data center memory prices climbed 25% in the third quarter (Q3), beating its own estimates.
