On the most recent episode of The AI Investor Podcast from 24/7 Wall St., hosts Eric Bleeker and Austin Smith debated one of the most contentious calls in AI hardware right now: whether its time for investors to get out of memory stocks.
The conversation centers on SanDisk (NASDAQ:SNDK | SNDK Price Prediction), Micron Technology (NASDAQ:MU), Semtech (NASDAQ:SMTC), and NVIDIA (NASDAQ:NVDA). Bleeker discussed how social media last weekend had gone very negative on memory stocks, but he saw a path to lower margins and continuing strong profit growth in the years ahead. After this segment was released, SanDisk released gross margin targets for 2028 to 2030 that sent the entire memory sector soaring again.
Watch The Video
The full episode is embedded below. This post focuses on the memory and optics segment specifically. Other portions of the episode covering the SpaceX buildout economics and the newest portfolio addition are handled in separate recaps.
The Setup: Social Turned On Memory, Then The Stocks Ran
The debate is grounded in what actually happened in market sentiment over the past week. Reddit chatter on Micron flipped bearish briefly on Sunday, August 9, 2026, with a sentiment score dropping to 35 on wallstreetbets around a thread titled “MU IV crush this week did more work than the stock ripping to $1255 ever did.” On SanDisk, sentiment sagged into the 48-55 neutral range through Wednesday and Thursday.
Bleeker detailed the debate on social media platform X, where the weekend turned into a debate around memory versus optics. He highlighted a post from Citrini analyst Jukan05 which spaked much of the debate. In it, Jukan argued:
“I think the market ultimately has no choice but to go sell memory, long optical in the “short term.” Actually, some hedge funds already seem to have this position on. There are three main reasons. 1. With Korean leveraged ETFs effectively dead, LPs are in a redemption rush, which could bring out additional sell on flow. 2. Nvidia is nerfing Rubin Ultra’s HBM and responding with optics, tying multiple racks together, so that even if Rubin Ultra’s per rack performance is not superior to Rubin, at the cluster level optics let the Rubin Ultra cluster hold an edge over the Rubin cluster. This holds even if Rubin Ultra’s HBM nerf is a supply problem rather than a demand problem. 3. Consensus is forming that memory prices will peak within the next two quarters. Medium to long term I am still a memory bull, but short term I am somewhat bearish on memory. I currently have no memory position.”
Then this week got underway and memory stocks experienced a sharp turnaround. Micron sentiment rebounded to a bullish 78 by Friday afternoon, while SanDisk sentiment climbed back to 76 by Friday morning on the back of a post titled “Sandisk forecasts mid-to-high-teens revenue growth through 2030”.
Prices followed the narrative. SanDisk rose 35.38% for the week ending August 14, closing at $1,641.11. Micron rose 10.72% over the same week, closing at $971.66.
Peak Margins Have Historically Been The Exit
Eric Bleeker opened the segment with a historical framework that has served memory investors well through prior cycles. “Historically, gross margin peaks have been the sign to get out of memory,” he said. He pointed to investor concern building after SanDisk’s most recent earnings, where the company indicated it would hold margins near current levels rather than continue expanding.
Current gross margin levels are striking. SanDisk’s Q4 FY2026 non-GAAP gross margin came in at 84.6%, up from 78.4% the prior quarter and 26.4% in the prior year. Management guided Q1 FY2027 gross margin to a range of 83% to 85%, essentially flat sequentially. Micron’s gross margin story is similar. Q3 FY2026 came in at 84.9%, a company record, with Q4 guidance of approximately 86%.
For a sector that historically saw peak cycle margins in the low 60s, current levels represent uncharted territory.
Smith’s Pushback: There Is No More Room To Compress From The Top
Austin Smith pointed out that gross margins nearing their peak were actually healthy. Highlighting SanDisk’s near-85% gross margin, Smith noted, “You can’t get more than 100%, and you’re pretty darn close to that already.” The implication: applying the old peak-margin sell rule to a business printing structurally different economics ignores what has actually changed under the hood.
That structural change is the New Business Model framework SanDisk laid out on its call. CFO Luis Gomez indicated NBM margins are expected to run around 80%, with CEO David Goeckeler adding, “Durability is a big piece of it. We want to get a fair return for our product. I think mid-80s gross margin I would characterize as a fair return.” SanDisk has already signed up 8 diverse data center and edge customers on these agreements, with $16.5 billion in aggregate financial guarantees backing them.
Micron’s version is its Strategic Customer Agreements. As of the June call, Micron had signed 16 SCAs covering approximately 20% of DRAM volume and roughly one-third of NAND volume. Total cash deposits and commitments backing those deals sit at $22 billion, and management flagged that floor-price margins under these agreements are “well above our peak quarterly margins in any past cycle”.
Then this week SanDisk seemed to validate Bleeker and Smith’s call that memory margins could compress without crashing the market. SanDisk released a new financial model that forecasts non-GAAP gross margins at 80% in the 2028 to 2030 period. At those levels, revenues (and profit margins) would continue to grow. The market was impressed with the potential durability of SanDisk’s earnings, and bid up the entire memory sector.
The NVIDIA Rubin Read-Through
The hosts also weighed in on the recent NVIDIA Rubin headline about the platform reducing HBM content. Smith clarified the causality, saying NVIDIA is reducing HBM memory because of supply constraints, in his words, “there’s not enough supply, so they’re forced to work around it.”
Micron’s own commentary supports that read. CEO Sanjay Mehrotra said on the Q3 call, “We expect tight conditions to persist beyond calendar 2027 as a result of AI-driven demand across all segments coupled with structural supply constraints.”
The other side of NIVIDA’s HBM changes, which were highlighted by Jukan’s post, was that less HBM in NVIDIA systems would lead to an increasing amount of optics in NVIDIA’s next-generation systems.
Semtech: The Optical Pairing
Bleeker framed the practical takeaway as owning both sides of the AI infrastructure content trade. On the optical side, he recently added Semtech to the million-dollar AI portfolio he manages on the podcast as a play on the optical content shift in Rubin. Semtech’s fundamentals back the thesis. Q1 FY2027 net sales hit a record $291 million, up 16% year over year, with data center revenue at $71.6 million, up 39% year over year.
Q2 guidance calls for net sales of $328 million and sequential data center growth of 35%. CEO Hong Ho said on the call, “Our data center business is firing on all cylinders.” The FiberEdge and CopperEdge 1.6T ramps are the direct beneficiaries of the same NVIDIA rack architecture shift that memory suppliers are wrestling with.
Semtech closed at $140.35 on August 14, up 177.81% over the trailing year.
Key Takeaways From The Segment
- Margin math matters more than pattern matching. The hosts noted that memory gross margins moderating from near 90% down to 75-80% would still be historically extraordinary, given the previous cycle peak was 60%. That is a very different setup than prior cycles where peak margins meant an imminent trip back to breakeven.
- The reason for any pricing collapse would determine the fallout. If memory pricing collapsed due to a technological breakthrough, that would likely hurt only memory. If it collapsed due to demand destruction, in the hosts’ framing, “everything about AI infrastructure is in trouble.”
- Own both memory and optics. Bleeker recommended pairing memory exposure with optical exposure via Semtech to capture the full content shift happening inside the Rubin rack.
- Reset the return expectations. Both hosts cautioned that multi-hundred percent return expectations for memory or NVIDIA are no longer realistic. Investors expecting 25% annual returns from here should consider that a win.
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