Memory Capacity Is Sold Out Through 2027. Why Have Micron, SK Hynix, and Samsung Shares Tumbled?

Since the artificial-intelligence (“AI”) boom began, the industry has faced its share of bottlenecks. Power continues to be a major choke point, as America’s grids can no longer accommodate the immense energy needs of AI data centers. Thermal management has also been a significant issue, with data-center servers and equipment requiring proper cooling to prevent overheating.

But perhaps the biggest AI bottleneck to date has been memory. And that shortage has been building for months.

During Micron Technology’s (MU) first-quarter earnings call on December 17, CEO Sanjay Mehrotra stated:

Over the last few months, our customers’ AI data center build-out plans have driven a sharp increase in demand forecasts for memory and storage. We believe that the aggregate industry supply will remain substantially short of the demand for the foreseeable future…

Micron is working hard to support our customers’ demand during this time, and we expect to grow our [dynamic random-access memory (“DRAM”)] and NAND bit shipments approximately 20% in calendar [year] 2026. Despite significant efforts, we are disappointed to be unable to meet demand from our customers, across all market segments.

After Micron’s second-quarter earnings were released on March 18, Mehrotra told CNBC:

We are only able to supply, for our key customers in the midterm, about 50% to two-thirds of their requirements.

We’re now into August, and the supply of memory hasn’t improved. The world’s leading memory manufacturers – Micron, SK Hynix (SKHY), and Samsung Electronics (005930.KS) – have sold out their entire DRAM and high-bandwidth memory (“HBM”) not just through the rest of this year… but through all of 2027.

That should be good news for these companies, right? Sellouts mean that all of your product has been purchased, with backlogs promising millions or billions in future revenue. So, why has Micron stock sunk from its all-time closing high of $1,213.56 on June 25 to its August 3 closing price of $829.50? That’s a nearly 32% drop. In the same time frame, Samsung, which trades on the Korea Exchange, has fallen roughly 33%. And since SK Hynix went public on the Nasdaq on July 10, its price is down 15% through August 3.

What should investors make of this broad decline in the top memory stocks?

Why the 2027 Memory Sellout Matters

As bad as 2026 has been for memory shortages, 2027 will likely be much worse, at least according to SK Hynix CEO Kwak Noh-jung, who told Reuters that 2027 will likely be “the worst year in the industry’s history from the supply perspective.” He also projected that customer demand will exceed supply capacity “even beyond 2030.”

Here’s why: Memory manufacturers have been encouraging customers to sign long-term (three-to-five-year) contracts, “using an advance payment deposit model where customers essentially pre-pay for some of the memory capacity,” according to TechPowerUp.

With all of 2027’s memory allocation already being sold out, the only customers who will receive any memory supply are those who signed these agreements. Everyone else looks to be out of luck. There literally isn’t enough DRAM available. Those businesses that didn’t sign contracts with the memory manufacturers will be without the memory they need in 2027 and forced to wait until the 2028 supply is made available to order.

Even for those customers that did sign contracts, they’re still not guaranteed the memory supply in 2027. That’s because most of the memory supply will go to AI data centers, hyperscalers, and cloud-service providers. For example, Samsung has five-year agreements in place to supply the world’s five largest data-center operators with the memory they need… and that amounts to between 60% and 70% of Samsung’s memory production capacity.

It’s undoubtedly a smart business move by Samsung because it locks in steady revenue for the next five years. But who suffers the most from these deals? Everyday consumers.

With up to 70% of all memory production going everywhere but into consumer-electronics items, simple math tells us that only 30% of the memory supply remains for everyday products like phones, computers, tablets, and gaming consoles, to name a few.

And when supply is that limited, Economics 101 informs us prices rise. In fact, if you’ve shopped recently for some of these products, you’re already seeing the ripple effect.

So far, this year:

• Steam PC prices have increased between $240 and $300.

• Xbox and PlayStation game console prices have jumped between $100 and $150.

• Apple (AAPL) iPads are between $150 and $200 more expensive, and MacBook prices have soared by $100 to $300.

• Computer and server makers Dell Technologies (DELL), HP (HPQ), Acer, Asus, and Lenovo have also raised prices between 15% and 20%.

On top of the price hikes, global smartphone shipments are projected by IDC’s Worldwide Quarterly Mobile Phone Tracker to finish 2026 down nearly 14% from last year. That would represent the largest annual decline in the history of smartphones. IDC also projects a 1.1% decline in 2027.

All of this trickles down to other types of memory as well. With DRAM silicon wafers in such short supply, electronics manufacturers are turning toward alternative memory options, like NAND flash and solid-state drives (“SSDs”). And that higher demand is pushing those prices up.

With all that in mind, it’s fair to ask why memory manufacturers’ stocks continue to fall.

Why Memory Stock Prices Are Falling Despite Record Sales

There isn’t one clear answer as to why memory stocks have been sinking even as memory manufacturers have completely sold out their supply through next year. Multiple factors are contributing to the stocks’ declines.

For one, as the market looks ahead, there are serious concerns about how sustainable this nonstop AI spending is, even if most of the companies spending are flush with cash. Investors cast a wary eye on hyperscalers and other tech companies and wonder whether this head-spinning spending will slow.

Second, the valuation of stocks like Micron and SK Hynix has been bolstered by huge price surges. While those increases may have been warranted based on the seemingly endless demand for their products as well as the subsequent sold-out inventory, the massive growth may already be baked into their stock prices. That leaves Micron and SK Hynix stocks with a paper-thin margin for error if demand for memory wanes even slightly.

Finally, this is just how the market works. Before the recent memory-stock dip, Micron, for example, experienced a huge move higher. For example, investors could have bought Micron shares for $367.85 on April 1. By June 25, the stock’s price rose to $1,213.56. That’s an increase of 230%… in less than three months. After an otherworldly surge like that, Micron was bound to fall back to Earth – which it has done since, falling roughly 27% (as of August 6) since its late-June high.

That’s simply a product of investors selling high and taking their profit, which brings the stock price back down. The market also tends to correct itself when stocks get ahead of themselves (see SpaceX). This volatility is likely the new norm for memory stocks, which will probably continue to see periods of big gains followed by pullbacks. This isn’t a reflection on the products or the demand, however. That remains real.

How New High-Bandwidth Flash Memory Impacts the AI Build-Out

A brand-new technology has entered the mix. On August 3, flash memory giant Sandisk (SNDK) announced that it, along with SK Hynix, had released the High-Bandwidth Flash (“HBF”) technical specification through the Open Compute Project.

Sandisk and SK Hynix were joined in this venture by Google and AI startup Tenstorrent to create this specification, which, according to Sandisk’s press release, “provides companies and developers designing AI inference systems and accelerators with a common technical framework for incorporating HBF technology where larger, near-compute memory capacity and higher bandwidth are needed to improve power and performance metrics and help reduce total cost of ownership.”

Near-compute memory capacity is essentially HBM placed close to computing cores, which is what AI inference systems need to process today’s AI workloads. The new HBF technology accomplishes this by merging high bandwidth with high capacity.

HBF basically bridges the gap between fast HBM and slow SSDs by stacking NAND flash memory, which provides high storage capacities at speeds that rival HBM. This technology has the potential to loosen AI inference bottlenecks and reduce costs, as HBF is substantially cheaper than HBM because it removes expensive DRAM from the equation.

Plus, HBF could potentially alleviate the AI data-center power problem. Most data centers today use HBM built with DRAM, which consumes power while constantly refreshing itself. HBF, using NAND flash memory, doesn’t require those refresh cycles. That means less power is used during AI inference, which could help lower costs.

Keep in mind, however, that HBF is just in its blueprint stage. It’s not a buyable product yet. Sandisk and SK Hynix expect HBF memory samples later this year, with actual AI-inference products possibly available in early 2027. This is a development worth watching, as it could play a large role later next year if it’s deployed at a commercial scale.

What to Watch for Going Into 2027

We know that all of Micron’s, SK Hynix’s, and Samsung’s memory inventory is sold out through 2027. So, what should investors watch for in the memory industry and its stocks going into next year?

We’ve alluded to some of these already, but they all bear repeating.

• The influx of HBM and DRAM memory alternatives: If data-center operators and consumer-electronics companies want memory, they don’t have any other choice but to look for alternatives to HBM and DRAM since there isn’t any available. Keep a close eye on different types of memory, such as NAND flash memory, high-speed graphics memory (GDDR6 / GDDR7), enterprise SSDs, and the emerging HBF memory.

• The companies making those memory alternatives: SK Hynix is still one to watch, as it manufactures high-speed graphics memory, enterprise-grade NAND flash, and data-center SSDs, as well as the sold-out HBM and DRAM. The South Korean company, as mentioned earlier, was also instrumental in the development of HBF. Samsung also produces the same memory types as SK Hynix and is now developing its own HBF solutions. And Micron is one of the world’s leading makers of high-speed graphics memory, NAND flash wafers, and enterprise SSDs.

Besides those “Big Three,” however, there are other major memory players. The largest being Sandisk, the longtime leader in advanced flash memory that partnered with SK Hynix in the development of HBF technology. In fact, Sandisk’s stock has seen some of the biggest growth in the history of the American stock market. A year ago, Sandisk was trading for roughly $42 per share. As of August 6? $1,258.58 per share. That’s a mind-boggling 2,890% increase in one year.

And that’s actually down from its June 25 closing high of $2,335 (which means, at that point, Sandisk was up 4,841% year over year). This backs up my earlier point regarding the volatility of the memory sector. After its absolutely massive surge, the market pulled back as investors sold off.

While NAND flash memory is a strong alternative, it’s also important to keep in mind that Sandisk, Micron, and Samsung have also sold out their full-year 2026 NAND flash capacity, and SK Hynix expects its inventory to sell out by the end of this month.

• The memory-making wild cards: You may not know much about Asian memory manufacturers Kioxia or CXMT. But they’re worth monitoring.

Kioxia, which trades on the Tokyo Stock Exchange, is actually a spinoff from Toshiba, the Japanese electronics giant that invented NAND flash memory. So, it’s no surprise that Kioxia is a global leader in the manufacturing of NAND flash memory as well as SSDs.

ChangXin Memory Technologies (“CXMT”) is a Chinese manufacturer of DRAM chips for smartphones, computers, servers, and other consumer-electronics products.

This isn’t a recommendation to invest in Kioxia or CXMT. Rather, it’s an alert to watch these Asian tech giants because they could very well eat into the profits of Micron, SK Hynix, and Samsung.

CXMT, for example, is quickly ramping up its DRAM production. In fact, it currently holds a significant 8% of the global DRAM market. And CXMT’s late-July IPO on Shanghai’s STAR Market closed around 466% above its offer price, ensuring it has plenty of financial heft (roughly $8.6 billion) behind it to keep expanding its production.

How Risky Are Memory Stocks?

The massive gains have certainly been enticing. Anyone who bought Micron or Sandisk stock at this time last year must like what they see in their portfolios right now. However, as lucrative as the memory industry has been, some risks come with investing in it.

As I mentioned, the memory industry is volatile. Since late 2022 and the start of the AI data-center boom, it has been riding a massive growth wave that hasn’t fully crashed down yet. One only needs to look at the recent stock growth of all the companies discussed in this article.

Until recently, that is. Consider this recent downturn part of the boom-and-bust cycle.

Back in May, William de Gale, a portfolio manager at BlueBox Asset Management, told CNBC that the industry typically experiences “enormous ups and downs” and that, “in the long run, it’s a pretty dreadful industry.”

While de Gale’s view is pretty grim, his point is valid. Investors in the memory industry better buckle their seat belts, because they’re in for a wild ride.

Consider the five-year betas, which measure stock volatility compared with the overall market, for Micron (2.21), SK Hynix (2.41), and  Samsung (1.56), all of which are roughly 1.5 to 2.4 times more volatile than the market.

Investing in memory stocks through 2027 may produce big gains simply because of supply and demand. But what happens in 2028, when more memory is expected to be available? Again, supply and demand come into play. As more product becomes available, prices should drop, which would result in tighter profit margins… and more than likely lead to a pullback in memory stocks.

Is that a guarantee? Of course not. Nothing investment-related ever is. And who knows what may unfold between now and 2028? But simple economics has stood the test of time for a reason. So there’s a strong chance memory stocks suffer as more capacity is manufactured.

Similarly, what happens if hyperscalers and AI companies tighten the reins on their spending? If you’re considering investing in memory stocks, pay close attention to what Amazon (AMZN), Alphabet (GOOGL), Meta Platforms (META), and Microsoft (MSFT) are spending on AI infrastructure over the next year or so. If there’s a downturn in spending, you can bet memory stocks and their investors will feel the consequences.

And don’t forget about companies like CXMT and Kioxia as they expand production and threaten to take a larger bite out of the global memory pie.

The bottom line? Memory stocks are a fascinating play. Despite this recent downturn, which we can likely attribute to simple valuation and market correction driven by selldowns, the industry is as strong as it’s ever been. And with AI’s demand for memory not expected to die down anytime soon, its stocks could bounce back soon.

Regards,

David Engle

Editor’s Note: What ever happened to the AI stock boom? Even AI darlings like Nvidia have essentially gone nowhere since summer 2025. Our friend and colleague at InvestorPlace, Louis Navellier, may have the answer. According to Louis, the AI industry is quietly “staging” ahead of the next great AI breakthrough… a new class of AI he calls “Superintelligence… but better.” How will it trigger a $100 trillion reset of the AI markets. How will the launch of this tech send some stocks to zero, and others soaring? And why does Louis say: Don’t buy or sell an AI stock in 2026 until you see what’s coming next? Go here for the full story (and Louis’ #1 pick).