MU, SNDK, SKHY, WDC Stocks Drop Overnight: AI Memory Giants Suffer Reversal As IBM-Driven Rally Fades

• Memory stocks rallied Tuesday after IBM said customers were shifting spending toward AI servers, storage and memory. 
• The following selloff on Wednesday appeared to be driven by profit-taking rather than weaker AI demand. 
• Analysts remain bullish on AI memory demand, with the supply of high-bandwidth memory expected to stay tight through 2027. 

The artificial intelligence hardware rally hit a sharp reversal Wednesday and overnight as leading memory and storage stocks, including Micron (MU), SanDisk (SNDK), SK hynix (SKHY) and Western Digital (WDC), tumbled despite broader markets gaining ground after investors moved quickly from chasing AI chip winners to locking in profits, triggering a swift selloff across the memory sector. 

Micron, SanDisk, SK hynix, and Western Digital stocks declined between 0.6% and 4% overnight, extending their 8% to 9% decline on Wednesday. 

How Did The Market Reversal Unfold 

The downturn followed a strong session on Tuesday, when memory manufacturers surged after IBM highlighted growing demand from corporate customers for physical infrastructure supporting AI workloads. 

"In the last few ⁠weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of ​expected price increases," said IBM CEO Arvind Krishna. 

The statement led to a rally in memory stocks on Tuesday. So, the latest selloff appeared to be driven by trading activity rather than by weakening demand for AI hardware.

The decline also came as investors reduced exposure across semiconductor stocks, with companies such as AMD and Intel also falling despite favorable inflation data lifting the broader market. Adding to the pressure were concerns about high valuations, making the stocks vulnerable to profit-taking and a broader shift of money into other sectors.

 Fundamentals Remain Strong For Memory Players 

Despite the decline, demand for AI-related memory chips remains strong. The limited supply of newer memory technologies such as HBM3e and HBM4 is expected to continue until 2027, supporting the sector’s long-term growth.

KeyBanc on Tuesday lifted its price target on Micron to $1,750 from $1,600 while maintaining an ‘Overweight’ rating on the stock, citing optimism about AI-related demand across the semiconductor supply chain.

KeyBanc said limited supplies of DRAM and NAND memory are keeping prices high. The firm added that tight supply is helping memory companies maintain strong pricing as customers compete for available chips. 

Barclays started coverage of SK Hynix with an ‘Overweight’ rating and a $330 price target, citing tighter supply through 2027 and only limited improvement in 2028.

On Monday, UBS raised its price target on Western Digital to $560 from $375 but kept a ‘Neutral’ rating on the stock. The firm expects Western Digital to report results that beat Wall Street estimates and come in at the upper end of the company's guidance.

SNDK’s Sharp Run Raises Risks 

Argus initiated coverage of SanDisk with a ‘Hold’ rating, noting that it remains a leading supplier of NAND flash technology and is well positioned to benefit from continued demand for nonvolatile memory products. 

While the long-term outlook for memory demand remains favorable, Argus warned that SanDisk's shares have already reflected much of that optimism. 

Memory Stocks: What Retail Traders Are Feeling

On Stocktwits, retail sentiment around SanDisk and SK Hynix remained in ‘bullish’ territory, while sentiment around Micron shifted to ‘neutral’ from ‘bearish’ the previous day. Sentiment around Western Digital remained in ‘extremely bearish’ territory. 

So far this year, MU, SNDK and WDC stocks have gained between 198% and 580%, while SKHY stock has gained 5% since its debut last week. 

Also See: ASML Stock Eyes Second Weekly Gains: Retail Bulls Call Chipmaker The 'Ultimate Gatekeeper Of Tech'

For updates and corrections, email newsroom[at]stocktwits[dot]com.