Micron Technology and SK Hynix both crossed $1 trillion in market capitalization this week, the latest sign of how tightly investors are pricing artificial intelligence demand into memory chip stocks. Micron got there first, with shares up 19% in a single session. SK Hynix followed a day later, jumping as much as 11% intraday before closing up 9.21%.
Both moves trace back to the same shortage. Explosive demand for AI compute has left chipmakers struggling to keep up with orders for the memory chips that feed AI servers and accelerators, and that shortage has let Micron, SK Hynix, and Samsung raise prices. Micron's stock has more than tripled since the start of the year, and SK Hynix's has climbed roughly 250% over the same stretch.
UBS raised its price target on Micron sharply around the same time, taking it from $535 to $1,625 a share and pointing to long-term supply agreements with partially fixed pricing as one reason the stock could keep re-rating higher. At that target, Micron shares would need to more than double from where they closed the previous Friday. Micron had crossed $700 billion in market value only a few weeks earlier, a measure of how fast the run has moved.
The rally has broadened past the memory makers. Intel, which missed the early phase of the AI trade, is up more than sixfold and trading near its own all-time highs, a turnaround that follows a significant U.S. government investment in the company last summer. Qualcomm, Advanced Micro Devices, and Marvell Technology have each touched new highs this week too, though none of the three has crossed the $1 trillion threshold Micron and SK Hynix now share.
SK Hynix's rally came weeks after Samsung Electronics also passed the $1 trillion mark, meaning all three of the memory makers investors watch most closely for AI exposure have now cleared that threshold within weeks of each other. SK Hynix and Samsung together account for more than 40% of South Korea's Kospi index, tying the benchmark's performance closely to global demand for AI-linked chips.
"Fundamentals and valuations of the two twin towers … are still very much intact," said Peter Kim, global investment strategist at KB Financial Group, referring to SK Hynix and Samsung Electronics. He said SK Hynix's valuation has become "cheaper" even after the rally, since analysts have raised earnings forecasts faster than share prices have climbed.
Not every read on the rally is that comfortable. Some analysts have pointed to the concentration itself as a risk, warning that the Kospi's growing reliance on two stocks leaves the index more exposed to shocks, including supply chain disruptions and any slowdown in data center spending. Memory has swung between shortage and glut before, and a stock trading on multiples this rich has less room to absorb a demand pullback than one still priced for skepticism.
None of the three companies has said publicly how long the current pricing power will last, and neither Micron's nor SK Hynix's most recent quarterly results yet reflect a full period at these prices. The market capitalization figures are a snapshot of this week's trading. Whether they hold depends on whether the shortage does too.
Leave a Reply