Key Points

Both companies are benefiting from the memory chip shortage.
The memory chip market may not recover until 2028.
10 stocks we like better than Micron Technology

Two stocks have defined the market so far in 2026: Sandisk and Micron. These two are leading the S&P 500 in performance and have been the stocks to own this year.

Micron is lagging a bit behind Sandisk, only rising 242% so far this year. Sandisk is leading the way at 635% growth, but that figure was more than 800% a few days ago before the most recent round of tech stock sell-offs.

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These two are about as red-hot as it gets, yet they are each down around 20% from their all-time highs established just days ago.

If you missed out on these two, now could be your chance to buy them on sale, as the same catalysts that propelled their stocks higher in the first half of 2026 will remain present through the end of 2026 and into 2027.

Image source: Getty Images.

The memory chip market remains tight

Both Micron and Sandisk are memory chip fabricators. Memory chips are useful for information recall in computing devices. They are vital, whether it is in a GPU for data centers processing artificial intelligence workflows, a smartphone, or a laptop. Memory chips are used in everything.

While there are a few types of memory that are used in different situations, there is not much that sets one manufacturer apart from another. As a result, the market is highly commoditized, making it highly sensitive to supply-and-demand dynamics.

With unprecedented demand for memory chips coming from the data center build-out, the memory chip production industry was not ready for this massive spike. With high demand and low supply, prices skyrocketed, allowing Micron and Sandisk and its peers to benefit from soaring prices. That is the primary reason for its rise, but investors are likely concerned about demand dropping eventually.

That is a valid concern, but it may not be for a while. During Micron recent earnings call its management team said they expect tight conditions to persist in the DRAM and NAND memory markets beyond 2027.

The reason for that is two-fold: First, data center demand is rising because AI hyperscalers are far from done building out data centers. Second, many memory chip fabricators are scrambling to build new facilities to meet demand, and those are not expected to come online until 2027 or later. Even then, it will remain unknown whether the new supply will be able to meet eventual data center demand, as it could still be a bottleneck.

Regardless, the factors that caused these two stocks to skyrocket in 2026 will remain active over the next year and a half. That is plenty of time to make a solid return on investment from these two stocks, as another catalyst for their rise is still active.

The stocks appear cheap, as well

Because the memory chip market is commoditized and had relatively low growth, the market did not value these stocks highly a year ago. Both Sandisk and Micron shares traded for as little as 1 to 2 times forward earnings at this time last year.

SNDK PE Ratio (Forward) data by YCharts

However, despite their massive run-up in recent months, the stocks still trade for less than 14 times forward earnings. For reference, the S&P 500 trades for about 21.7 times forward earnings. Compared to the broader stock market, Sandisk and Micron appear undervalued and could easily double from today levels over the next year or so.

That makes them well worth considering as investments, but you will need to stay on top of them, as any report that memory chip companies are losing their pricing power could be a major catalyst for the stock to sell off. I think we are still a few years away from that happening, making them solid stocks to buy now.

Should you buy stock in Micron Technology right now?

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Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.