4 memory stocks are darlings of the AI boom. How they differ and why we own Micron
Micron , Sandisk , Seagate , and Western Digital have emerged as four of the hottest ways to invest in the artificial intelligence revolution. While often trading together, these companies are not the same. All four do rank among the S & P 500 ‘s 10 best performers this year, fueled by booming demand for the memory and storage needed to support the buildout of AI data centers. Sandisk leads the way, soaring roughly 575% year to date. Micron is up 240%, followed by Seagate’s about 210% gains, and Western Digital’s more than 170% rise. Zooming out, the gains are even more staggering. Since the start of 2025, Micron has surged roughly 920%, with Western Digital up 820%, and Seagate up nearly 740%, compared with a 25% gain for the S & P 500 . Sandisk, which began trading independently in February 2025, has soared more than 4,300%. The group began its massive run as hyperscalers accelerated spending on AI data centers, sending demand for memory and storage soaring. Supply couldn’t keep pace, creating shortages that gave producers tremendous pricing power and helped propel earnings — and their stocks — higher. That momentum intensified into 2026 before reversing sharply in recent weeks, leaving the four stocks roughly 20% to 40% below their late-June peaks. While they all have benefited from the same AI spending boom , they occupy different parts of the memory and storage ecosystem. The easiest way to distinguish the companies is through the trade-off between speed and cost across their three main technologies: DRAM (dynamic random-access memory), NAND flash memory (a type of non-volatile storage), and hard disk drives. At one end is DRAM. That is Micron’s bread and butter. It’s the fastest and most expensive of the three. NAND — Sandisk’s sole focus and also part of Micron’s business — is slightly slower but cheaper. Hard disk drives, or HDDs, made by Seagate and Western Digital, offer even slower access but are the cheapest way to store huge amounts of data. Importantly, these technologies aren’t necessarily substitutes for one another. Modern computers and data centers “need all of them,” D.A. Davidson analyst Gil Luria told CNBC. “They do different things.” Micron CEO Sanjay Mehrotra echoed that point, saying AI is creating demand across the memory and storage ecosystem. “AI is driving a whole hierarchy of memory requirements, from high-bandwidth memory to DRAM to SSDs [solid state drives], and this is the exciting era for memory and critical need that all AI systems have,” Mehrotra said on ” Squawk on the Street ” on Thursday, appearing with Jim Cramer from the site of the company’s planned $10 billion research facility in hometown of Boise, Idaho. Micron MU YTD mountain Micron’s year-to-date stock performance. Micron sells both DRAM and NAND, but its DRAM business has become increasingly important as AI demand accelerates. Micron is the only one of the four that we own for the Club portfolio. DRAM is essentially a computer’s short-term working memory. It holds the data that processors need to access quickly while performing calculations. DRAM is also the type of chip that is stacked to make high-bandwidth memory, or HBM. HBM acts like an ultra-wide data highway designed to rapidly move enormous amounts of data to and from graphics processing units (GPUs) and central processing units (CPUs). That makes HBM fundamentally important to training and running increasingly sophisticated AI models. “It’s more important to the data center than CPUs are,” Luria said. Mehrotra — an engineer by trade who’s worked in the chip industry for over 40 years and previously co-founded Sandisk — said that AI has fundamentally changed the memory business. “Today there is no AI without memory. AI systems need more memory. They need higher performance memory. They need lower power memory,” Mehrotra told Jim later on ” Mad Money .” “So, the value of memory, that equation has totally changed.” Luria made a similar point, arguing that memory has become part of the computing engine itself. “It’s no longer just storage,” he said. “It’s actually how the model works. It’s the guts of the model now. It’s not just a periphery. It’s not an accessory.” That’s an important distinction for Micron, as memory has historically been considered a commodity. Micron, as well as South Korea’s SK Hynix and Samsung Electronics — the world’s three major DRAM producers — had competed largely on price, contributing to the brutal boom-and-bust cycles that have long characterized the industry. Now, instead of customers simply soliciting bids and buying from whichever supplier offers the lowest price, HBM must increasingly be designed alongside the processors and systems in which it will operate. That creates deeper relationships between memory suppliers and customers and greater visibility into future demand. Mehrotra said Micron still can’t produce enough to satisfy demand. “All our customers across our end markets will buy everything that we make,” the CEO said, adding that data-center customers currently want roughly 50% more supply than Micron is able to commit. Micron is attempting to further reduce the cyclicality of its business through long-term strategic customer agreements, or SCAs. The company announced 16 such agreements alongside its June earnings report . Mehrotra said on “Mad Money” that the company has signed additional agreements since. Sandisk SNDK YTD mountain Sandisk’s year-to-date stock performance. Moving one step down the speed-and-cost spectrum brings us to NAND. Sandisk is essentially a pure play on NAND flash memory following its separation from Western Digital in February 2025. NAND is slower than DRAM but has an important advantage: it retains information even when power is turned off. In AI data centers, that makes NAND useful for storing the massive datasets used to train models and other information that needs to be saved for later. Put simply, DRAM holds the data a processor needs right now, while NAND stores larger amounts of data that it may need later. Sandisk and Japan’s Kioxia jointly manufacture NAND through their longstanding partnership. Samsung, SK Hynix, and Micron are the other major suppliers. Seagate and Western Digital STX WDC YTD mountain Seagate and Western Digital’s year-to-date stock performance. Seagate and Western Digital sit at the other end of the spectrum. The two companies primarily make hard disk drives and are much more direct competitors with one another than they are with Micron or Sandisk. HDDs can’t access data nearly as quickly as DRAM or NAND. But they’re significantly cheaper, making them an economical way for data centers to store enormous quantities of information that don’t need to be accessed instantaneously. Unlike NAND, which uses silicon-based semiconductor chips with no moving parts, HDDs aren’t semiconductors. Instead, they store data magnetically on spinning disks. Western Digital’s sole focus on hard drives is relatively new. The company previously owned Sandisk, giving it exposure to both HDDs and NAND, before completing the separation of the flash business in 2025. Bottom line The AI buildout can benefit all four companies as their products serve different purposes. “When I build a data center, I buy a certain level of HBM, some DRAM … some NAND and I buy some disk drive,” said D.A. Davidson’s Luria, putting himself in the shoes of a chief technology officer. “Depending on what my data center is trying to accomplish, I buy a mix of all of those things.” The opportunity extends beyond data centers. Mehrotra said he expects autonomous vehicles, robots , and AI-enabled consumer devices to require increasingly large amounts of memory in the years ahead. Still, Luria sees Micron as particularly well positioned because of its exposure to HBM, which is becoming more critical to AI computing and no longer behaves like the commodity memory of the past. Asked whether that gives Micron a competitive advantage, his answer was simple: “Huge.” Luria also thinks investors have yet to fully “wrap their head around” that shift and memory’s growing importance to AI infrastructure. That’s a key reason we bought Micron on Aug. 11 . The stock still trades at a steep discount to many semiconductor peers, reflecting skepticism about the durability of the memory cycle. But if HBM and Micron’s longer-term customer agreements make earnings more sustainable, we see room for investors to assign the stock a higher multiple. (Jim Cramer’s Charitable Trust is long MU. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
About the Author
