Companies making memory chips and storage drives are seeing huge demand, but won’t rapidly boost production, even with severe shortages hitting multiple markets.
The memory business is dealing with what industry watchers call an extraordinary supply crunch. Building out artificial intelligence infrastructure has eaten up most available NAND flash memory, DRAM chips, and hard drives. Other sectors are struggling to get supplies. PC and smartphone makers are having particular trouble getting components.
Last month, Morgan Stanley’s chip analyst Joe Moore called it a “generational supply and demand mismatch” in the memory industry.
Tight supply has pushed prices up, delivering big revenue gains to manufacturers. Micron hit record quarterly sales and operating profits last month. Samsung said Thursday its fourth-quarter operating profits would likely triple compared to last year.
Normally, extreme shortages and high prices would make manufacturers quickly ramp up output. But memory companies are being careful. They’ve been burned by wild price swings before.
Wall Street rewards caution
That caution has rewarded investors. Memory stocks have become Wall Street darlings. Micron, Seagate, and Western Digital all saw shares more than double in 2025, making them the S&P 500’s best performers. Sandisk, which split from Western Digital in February, has jumped tenfold. SK Hynix, the South Korean maker focused only on memory, gained 88% in just three months.
Analysts think memory chip and hard drive prices will stay high this year, probably keeping stock values elevated. But the industry has a brutal history. Price drops have repeatedly pushed producers into the red and tanked their stocks. It happened as recently as 2023, when Micron, Western, Seagate, and Hynix all posted yearly operating losses.
Will things be different now? Maybe. Computing systems from companies like Nvidia and Advanced Micro Devices need tons of specialized DRAM to work. These systems also create mountains of new data that have to go somewhere—on hard drives and flash-based solid-state drives.
Bernstein analyst Mark Newman calls this a “data explosion.” He expects combined data-storage shipments for NAND flash and hard drives to grow 19% annually over four years. That beats the 14% average from the past decade.
Nvidia and AMD have also sped up their release cycles. They’re now launching major new systems every year. Adding more DRAM memory to these systems boosts performance over older versions. Nvidia’s Rubin GPU chips, shown off last week at the Consumer Electronics Show, nearly triple the memory bandwidth of the Blackwell chips that started shipping last year.
The demand depends on capital spending by the world’s biggest tech companies. That’s already at sky-high levels and shows no signs of slowing. Based on December quarter estimates, Amazon.com, Google, Microsoft, and Meta Platforms spent $407 billion combined in 2025.
Analysts expect that to hit about $523 billion this year, according to Visible Alpha consensus projections. “If demand stays this robust, the upcycle could continue for multiple years,” Moore wrote.
Memory executives remember the bad times
Even with dire predictions of memory shortages for other electronics, producers like Micron, Sandisk, Seagate, and Western Digital are moving carefully on new production capacity. Only Seagate plans a real increase in capital spending this year, and that’s just to keep its spending around the usual 4% of revenue.
Sandisk expects to grow capital spending by 18% for its fiscal year ending in June, even though revenue is jumping 44% in the same period, FactSet estimates show. At a UBS conference last month, Sandisk Chief Executive David Goeckeler said the lack of long-term supply deals in most of the NAND flash industry makes it tough for companies to plan big investments. Like other semiconductors, NAND flash chips need facilities that take years to build.
“Perhaps the demand side should think about making commitments that are longer than three months at a time,” Goeckeler said at the conference. He added that companies “need to get the economics right to be able to continue to invest that money and not go through these huge episodic periods of losing money.”
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