MU, AMD, INTC, SNDK Stocks Fall — Morgan Stanley's Mike Wilson Explains Why Investors Are Going After Chip And Memory Stocks

• Wilson added that hyperscaler stocks underperformed because their free cash flow generation was “atrocious.”
• He also highlighted that the correction in semiconductor and storage stocks is “pretty well advanced” and severe.
• The Roundhill Memory ETF was down nearly 12% at the time of writing, while the iShares Semiconductor ETF fell about 7%.

Memory and chip stocks fell in Tuesday’s opening trading, with shares of Micron Technology Inc. (MU), SK Hynix Inc. (SKHY), Advanced Micro Devices Inc. (AMD), Intel Corp. (INTC), Seagate Technology Holdings (STX), Western Digital Corp. (WDC), SanDisk Corp. (SNDK), and others in the sector declining between 4% and 15% in the opening trade.

The Roundhill Memory ETF (DRAM) was down nearly 12% at the time of writing, while the iShares Semiconductor ETF (SOXX) fell about 7%.

Strategist Explains What’s Happening With Memory And Chip Stocks

Morgan Stanley’s Chief U.S. Equity Strategist & Chief Investment Officer, Mike Wilson, said during an interview with CNBC that markets are now punishing memory and chip stocks after moving on from hyperscalers.

“Hyperscalers, the reason why those stocks have underperformed is because, while the earnings have been good, the free cash flow generation is atrocious, and so, the market has punished them,” he said. “I think a lot of that is behind us and now they're going after semiconductor and some of the storage names.”

Wilson added that the correction in semiconductor and storage stocks is “pretty well advanced” and severe.

Very Constructive On S&P 500 For 2026, Says Wilson

Wilson highlighted that the S&P 500 index is currently very choppy, outlining the two factors that are contributing to this trade.

“I still think we’re chopping around… my guess is because of the Fed uncertainty, because of the war uncertainty still,” he said.

Wilson added that this choppiness may continue for another month or so, while highlighting that the index being up 8% year-to-date despite the decline in the leading stocks is a good sign.

“It’s pretty amazing given the corrections we’ve had in the leaders. That is a good sign that there is a pretty good underlying backdrop in the economy in my view,” he added.

Wilson Says S&P 500 Could Still Hit 8,000 By Year-End

Wilson remained optimistic about the prospects for the S&P 500 this year, saying that he believes the benchmark index could still hit 8,000 by the end of 2026.

That implies an upside potential of more than 8% from current levels of about 7,400. The S&P 500 index’s 52-week high is 7,621, a level that was hit on June 2, 2026.

Wilson added that the markets are currently focusing on three factors, namely, earnings quality, earnings stability, and free cash flow generation. “The top 100 stocks, on a quality basis, are now starting to outperform, which is right on schedule with the recovery,” he said.

The S&P 500 ETF Trust (SPY) is up 16% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 19%.

The iShares U.S. Technology ETF (IYW) is up 26% during this period.

Also See: AAPL Becomes Second Company To Top $5 Trillion Market Cap, Plans Revamped Smart Home Push To Take On GOOGL, AMZN

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