Shares of memory and storage companies fell sharply on Tuesday as investors took profits following a massive rally tied to artificial intelligence infrastructure demand, triggering a broad selloff across the semiconductor memory sector.
Shares of SanDisk (SNDK) dropped 9.39% to around $1,402 during midday trading, while Micron Technology fell more than 8.19% to roughly $730. Western Digital declined about 7.2% to $478.
The coordinated decline came after the same stocks posted strong gains in the year.
The latest pullback suggests investors are rotating out of some of the market’s biggest AI-linked winners following an extraordinary run higher over the past year.
Profit-taking hits AI memory trade
The memory sector has been among the strongest-performing areas of the semiconductor market as demand for AI infrastructure accelerates.
SanDisk shares entered Tuesday up 552% year-to-date in 2026, while Western Digital had gained 200% and Micron was higher by 179%.
Over the last 12 months, SanDisk shares have surged 3,299%, with Western Digital up 921% and Micron climbing 684%.
The sharp gains have been fueled by growing demand for high-bandwidth memory (HBM), a critical component used alongside AI accelerators in data centers.
Analysts noted that Tuesday’s decline appeared to reflect broad sector-level profit-taking rather than any company-specific deterioration in fundamentals.
SanDisk continued to show the largest swings among the group, consistent with its position as the highest-beta stock within the AI memory trade.
The selloff also reflected concerns that semiconductor valuations may have moved ahead of near-term fundamentals following the sector’s parabolic rise.
Strong earnings supports long-term AI outlook
Despite the pullback, recent earnings from all three companies remained strong and continued reinforcing the broader AI growth narrative.
SanDisk reported fiscal third-quarter 2026 earnings per share of $23.41, well above consensus estimates of $14.66, while revenue climbed 251% year-over-year to $5.95 billion.
The company’s datacenter segment surged 645%, with Chief Executive Officer David Goeckeler describing the shift toward higher-value AI markets as a “fundamental inflection point.”
Micron also posted strong fiscal first-quarter 2026 results, reporting adjusted earnings per share of $4.78 compared with analyst estimates of $3.94.
Revenue rose to $13.64 billion, supported by strong cloud memory demand and growing AI infrastructure spending.
Chief Executive Officer Sanjay Mehrotra called Micron an “essential AI enabler,” while reports indicated the company’s HBM production capacity is already booked into 2027.
Meanwhile, Western Digital reported adjusted earnings per share of $2.72, ahead of expectations for $2.39.
The company also increased its dividend by 20% and reported gross margins above 50% for the first time.
AI demand remains strong, but cycle concerns persist
Investors continue debating whether the current AI memory cycle differs structurally from previous semiconductor booms and busts.
Supporters of the sector argue that demand intensity is rising rapidly as AI systems require increasingly large amounts of advanced memory.
Micron recently introduced a new 256GB DDR5 RDIMM memory module designed for artificial intelligence and high-performance computing workloads.
The module uses the company’s 1-gamma DRAM process and delivers speeds up to 9,200 MT/s, more than 40% faster than current production modules.
The industry is also shifting toward longer-term supply agreements with hyperscale customers, reducing reliance on volatile spot pricing.
However, concerns about eventual oversupply remain.
Micron plans capital expenditures above $25 billion in fiscal 2026, while competitors SK Hynix and Samsung Electronics are also aggressively expanding capacity.
Historically, simultaneous capacity expansion across major memory suppliers has often led to sharp pricing downturns once demand growth slows.
Even so, analysts noted that large single-day swings remain common across the memory sector during periods of elevated volatility.
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