Memory and storage stocks are sliding again Thursday morning, extending a rare pullback for a group that has posted extraordinary gains through 2026. SanDisk (NASDAQ:SNDK | SNDK Price Prediction) stock is leading the declines, down 11% to $1,802 in midday trading. Seagate Technology (NASDAQ:STX) shares are off 7% to $852, Western Digital (NASDAQ:WDC) shares are down 7% to $556 and Micron Technology (NASDAQ:MU) stock is lower by 4% to $992.
The sector proxy is moving in lockstep. The Roundhill Memory ETF (CBOE:DRAM) is down 5% to $62, reflecting broad weakness across NAND, DRAM, and hard-disk-drive names as traders trim exposure to some of 2026’s biggest winners.
Thursday marks the second straight session of declines, with Micron and SanDisk stock also falling sharply on Wednesday. The setup looks like profit-taking and institutional rebalancing at the start of the second half, without a clear fundamental trigger, catalyzed by a fresh warning from a well-known research shop.
Morningstar Warning Fuels the Reset
The immediate catalyst is commentary from Morningstar’s director of research, Lorraine Tan, who told Bloomberg TV that a large slice of AI names could give back 20% to 30% before becoming buyable again. As we detailed recently, Tan flagged the biggest-gaining memory names as the most exposed to a valuation reset.
Her concern centers on capacity. Announced supply additions from Samsung and SK Hynix are expected to soften memory pricing as supply catches up with demand, while AI capital expenditure is expected to peak in 2026 and taper thereafter. That combination targets exactly the pricing power that drove the group’s dramatic margin expansion this cycle, and it lands on stocks that have posted enormous multi-hundred-percent gains in 2026.
The Roundhill Memory ETF illustrates the concentration risk. Its top holdings include Samsung Electronics at 25%, SK hynix at 24%, and Micron at 24%, followed by SanDisk, Western Digital, and Seagate. When capacity fears hit, the whole basket moves.
Bull Case Isn’t Going Quietly
The sell-side counterpoint remains firm. Bank of America (NYSE:BAC) on Wednesday raised its SanDisk stock price target to $2,500 from $2,100 with a Buy rating, arguing the NAND supply-and-demand imbalance and firm pricing should persist through 2027. That target sits well above where SanDisk stock is trading after today’s slide.
Micron’s fundamentals also cut against the glut narrative. The company reported fiscal Q3 revenue of $41.46 billion, up 346% year over year and guided fiscal Q4 revenue to $50 billion, citing multi-year Strategic Customer Agreements as cycle insulation. Micron stock trades at a forward P/E ratio of 7x, with a consensus analyst target of $1,410 and overwhelmingly bullish coverage.
Seagate and Western Digital carry similar tailwinds. Both are seeing accelerating hard-disk demand tied to AI training and inference storage, and both delivered solid earnings beats in their most recent quarters. Retail sentiment, notably on Reddit, has stayed largely bullish through the pullback, though sentiment is not a fundamental.
What to Watch Now
The Roundhill Memory ETF offers a clean read on how the group trades from here, though the ETF and its underlying chip stocks have been highly volatile. A one- or two-day pullback after such a run doesn’t by itself invalidate the long-term thesis, but it does test conviction at a very different price than a month ago.
The tension is easy to identify here. The bull case rests on AI-driven memory demand outpacing supply into 2027. The bear case, articulated by Morningstar, is that new capacity plus a plateau in AI capex could compress pricing sooner than expected. Both can be right on different timelines, which is why position sizing matters.
Investors may want to size their positions in these names carefully after an extraordinary run. Market watchers can watch for whether the group finds a bid into the close, and whether any Wall Street desk pushes back publicly on the Morningstar call in coming sessions.
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