Investors just can’t seem to get enough of the memory and storage stocks, even after their mouth-watering parabolic moves. Micron (NASDAQ:MU | MU Price Prediction) and South Korea’s SK Hynix are now $1 trillion companies. It’s hard to believe, but they’re rising up the ranks in a big way. And analysts across Wall Street still expect more from the firms as the great AI-driven memory supercycle continues.
Similarly, SanDisk (NASDAQ:SNDK), which is up an absolutely ridiculous 4,500% in the past year, is getting up there, too, now boasting a market cap of $271 billion. It’s an unstoppable force, but, in many ways, it smells like a bubble could be brewing.
Could strength beget more strength?
Despite the stunning ascent, though, Barclays expects the run isn’t over. In fact, they see a move to $2,300 per share in the cards. That represents another 28% rise from current levels.
What a shocker. I guess the big question is whether sell-side analysts will be forced to lower the bar on their price targets after a sizeable fall after raising the bar during the ascent.
It’s tough to tell. But, either way, memory and storage stocks are not for the faint of heart.
Though, I’m sure traders will keep on testing their luck, given the explosive momentum to be had and a narrative that’s really tough to argue against, as the AI data center buildout eats up all the DRAM and storage out there, leaving everyday consumers with a lack of supply and much higher prices on what’s available.
While memory and storage stocks could still have another leg or two higher, investors should understand the risks of losing sight of the valuation.
Just like SK Hynix, perhaps there are some colossal winners outside of the U.S. market. And perhaps there’s a steep relative discount to be had versus the likes of the well-known names, like Micron and SanDisk, both of which are running hot, at all-time highs.
Enter Kioxia Holdings, a lesser-known play on the NAND boom
Kioxia Holdings (KHHCF) is a lesser-known name that recently won a big upgrade from Goldman Sachs (NYSE:GS), which hiked its price target by more than 93%. That’s the kind of colossal upgrade that’s attention-grabbing, to say the least.
The Japanese company, which spun off from Toshiba several years ago, isn’t just a premier manufacturer of SSDs, but it’s also a frontier innovator, with impressive research talent and the means to bring in the new age of storage tech via its impressive stacking tech .
Of course, just like everything else in storage, shares of Kioxia have been a major multi-bagger in the past couple of months. The name is up over 3,500% in the past year.
A (slightly) cheaper play than SanDisk
That’s a SanDisk-esque kind of rise. At 8.14 times forward price-to-earnings (P/E) or just shy of 18.0 times price-to-sales (P/S), the name certainly looks cheaper compared to the likes of a SanDisk. And as the company readies for its U.S. markets debut, perhaps the name could be in a spot to make up for lost time.
For investors seeking to bet big on a physical moat, Kioxia might be the play, given its fab presence in Japan. At this stage of the AI boom, perhaps the manufacturing edge is where investors will want to be as the AI boom goes into overdrive and storage companies look to keep the strength going.
Personally, I’d much rather wait for a pullback before stepping in. A dip in storage stocks might be as sharp as the meteoric rise. Whenever Kioxia debuts in the U.S., though, I’m sure crowds will gather as investors look for the memory demand boom to span a while longer.
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