Memory chip stocks experienced a roller-coaster ride this week, with Micron Technology plunging 8% in a single day on Wednesday and SK Hynix ADRs tumbling 9%. Buffett’s sharp criticism of AI speculation as a bubble triggered a reversal in market sentiment. GF Securities Hong Kong simultaneously downgraded its Q3 DRAM price increase forecast, as customers strongly resisted the previously anticipated 30% hike. While fundamentals remain solid, dual pressures from supply expansion and downgrades in demand specifications are eroding market confidence in the sustainability of high prices.
Memory chip stocks experienced sharp volatility this week, as multiple bearish signals converged, abruptly pressuring the rally previously driven by AI-related demand.
On Wednesday, $Micron Technology (MU.US)$ The stock price plummeted 8% in a single day, $SK hynix (SKHY.US)$ with its American Depositary Receipts (ADRs) falling 9% simultaneously, sharply erasing the previous trading day's gains. The immediate trigger for this sell-off was Buffett’s warning that AI-themed speculation has become rampant and that genuine value is now hard to find in the market, although he did not name any specific company.
Meanwhile, GF Securities Hong Kong revised down its forecast for DRAM price increases in the third quarter during its monthly conference call, citing strong customer resistance to price hikes approaching 30%.
This recent downturn reflects the core tension currently facing the memory sector: while fundamentals remain robust, expectations of supply expansion and risks of demand-side specification downgrades are eroding market confidence in the sustainability of high prices.
Buffett’s Remarks Spark Sentiment Reversal
Micron’s stock performance this week resembled a rollercoaster. On Monday, July 13, shares fell 4.3% to close at $937; on Tuesday, July 14, the stock rebounded 4.7% after KeyBanc raised its price target to $1,750, citing expectations that the memory shortage would persist through 2027, with intraday trading briefly touching $994.80; on Wednesday, July 15, Buffett’s comments caused a sharp reversal in market sentiment, sending the stock down to around $865, bringing its market capitalization back to approximately $1.05 trillion.
Buffett’s exact words were that when everyone is eager to 'gamble' on themes like AI, finding truly valuable investments becomes 'increasingly difficult.' Although his remarks did not specifically target Micron, they struck directly at a key vulnerability in recent trading patterns for memory stocks—investors have been reacting to every piece of news as if placing bets on short-term price movements rather than making long-term judgments based on fundamentals.
A market observer noted that SK Hynix’s share price movement following its Nasdaq listing last week epitomized this 'gambling mentality': investors initially bought aggressively after CEO Arvind Krishna stated that client spending had shifted toward memory products, only to quickly sell off amid concerns that SK Hynix’s capacity expansion plans could depress industry-wide pricing.
DRAM Price Hikes Face Customer Resistance
GF Securities Hong Kong disclosed during its monthly conference call that customers have shown strong resistance to DRAM price increases nearing 30%, prompting the firm to slightly downgrade its Q3 DRAM price growth forecast. This stance contrasts with KeyBanc’s earlier projection of a 15%–20% DRAM price increase in the third quarter, highlighting how demand-side bargaining power is now constraining supply-side pricing expectations.
GF Securities (Hong Kong) also noted that the DDR5 specification for standard servers is expected to be reduced by approximately 50% compared to earlier projections. DRAM suppliers are advancing the rollout of new RDIMM and MRDIMM products with capacities of 96GB or 64GB, with the latter poised to become the new mainstream specification.
Additionally, according to GF Securities (Hong Kong)'s analysis on July 2, the LPDDR5X capacity in NVIDIA’s VR200 NVL72 rack has been significantly scaled back—potentially falling to as low as one-quarter of the original specification under extreme scenarios. This would compress the LPDDR5X cost from an initially projected peak of USD 1.2 million down to approximately USD 293,000. The firm also expects NVIDIA’s Vera CPU rack to adopt a 96GB SOCAMM configuration, reducing total memory capacity from the datasheet-specified 1.5TB to 768GB, which could further delay delivery timelines.
NAND and HBM Emerge as New Divergence Points
Although the outlook for DRAM has turned more cautious, GF Securities (Hong Kong) has adopted a notably more optimistic stance toward NAND flash memory. The firm highlighted that demand for KV cache offloading continues to exceed expectations, and a nascent trend of substituting costly DRAM with NAND is gaining traction—both factors jointly underpinning NAND demand.
KeyBanc analyst John Vinh maintains a positive view on the broader memory market, forecasting a 30%–40% price increase for NAND in Q3, followed by another 15% rise in Q4. HBM prices are expected to more than double next year. As a critical companion memory for AI processors, HBM places Micron—one of NVIDIA’s HBM suppliers for its AI chips—at the core of the AI hardware supply chain.
GF Securities (Hong Kong) remains optimistic about SK Hynix’s second-quarter results, projecting revenue of KRW 85 trillion and a gross margin of 63%.
SK Hynix ADR Faces Pressure from Narrowing Premium
SK Hynix’s ADR fell 9% on Wednesday to USD 176.46, while its local Korean shares rose 8.8% on the same day, reflecting a clear divergence in performance. Following a 27% surge on Tuesday, the ADR’s forward P/E ratio has climbed to approximately 6.2x, converging with rival Micron’s valuation—a shift that undermines one key rationale for prior investor interest, namely the historical discount of the ADR relative to the local share price.
Currently, SK Hynix’s ADR trades at a premium exceeding 50% over its Korean-listed shares. The Korea Securities Depository is expected to enable two-way conversion between local shares and ADRs starting July 29, which could significantly narrow this premium and create potential downward pressure on the ADR.
Strong Fundamentals Cannot Fully Mask Cyclical Concerns
Despite significant short-term sentiment volatility, Micron's fundamental metrics remain robust. The company reported revenue of $41.5 billion for its latest fiscal quarter, an increase of 346% year-over-year; net income surged nearly 1,400% to $28.2 billion; and adjusted earnings per share reached $25.11. Micron has secured $22 billion in memory chip supply commitment agreements with 16 strategic customers, featuring 'take-or-pay' clauses, cash deposits, and price floors, thereby anchoring demand beyond day-to-day market fluctuations.
However, the cyclical risks inherent in the memory industry remain unresolved. Micron’s capital expenditures this year are projected at approximately $27 billion, while SK Hynix and Samsung Electronics are also undertaking large-scale capacity expansions. Should supply catch up with demand, the company’s current pricing power will face severe challenges. The core bullish assumption—that supply tightness will persist longer than in historical cycles—remains the market’s greatest source of uncertainty.
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