After gaining 4250% from its low, SanDisk (SNDK) abruptly lost 25.88% in only a week. Micron Technology (MU) fell by nearly 20% in those five days as well. The stocks fell for several reasons.
The second quarter ended on June 30, so investors booked the gains in some of the semiconductor stocks. Selling continued on July 1 as markets followed along with the quarter-end re-balancing. In addition, investors rotated out of the cyclical hardware sector and into software stocks. For example, on Thursday, shares of Adobe Systems (ADBE) closed at $219.72, up by 13.6% on the week.
Micron shareholders lack the conviction that the company broke away from the cyclicality of the chip sector. The firm booked take-or-pay orders through 2030. That guarantees revenue even if chip demand weakens and prices fall.
More chip supply will come online in the coming years. SK Hynix planned to invest $64 billion in new AI memory chip facilities. Samsung is investing $648 billion in a chip factory. South Korea had a GDP totaling $1.87 trillion in 2025. So, Samsung’s investment amounts to one-third of the country’s GDP.
The chip sector cannot escape the boom-and-bust cycle. Either AI-related demand for chips will slow, or a supply glut will push down prices. Stock markets are pricing for one of those two scenarios.
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