Crazy Volatility & How To Use It; Memory No Longer A Commodity

At this year’s World Economic Forum in Davos, Switzerland, Micron Technology CEO, Sanjay Mehrotra delivered insights that should capture the attention of anyone tracking the technology industry’s evolution.

His perspective on the memory market’s trajectory aligns remarkably well with trends emerging from our industry research and signals a fundamental shift in how organizations must approach this critical technology component.

The numbers tell a compelling story. Mehrotra’s projection of over 100% year-over-year growth in the memory market for 2026 isn’t just impressive—it’s transformative. This extraordinary expansion stems primarily from two interconnected forces: the relentless buildout of AI infrastructure and a strategic pivot in manufacturing capacity toward high-value memory products.

What we’re witnessing is nothing short of a market recalibration, where traditional demand patterns are being rewritten by the computational demands of artificial intelligence and machine learning workloads.

This growth trajectory, however, comes with significant complexity. The ongoing shortage situation and persistently tight supply environment present formidable challenges for original equipment manufacturers, cloud service providers, and enterprise buyers. Unlike previous shortage cycles that eventually resolved through traditional supply-demand adjustments, today’s constraints are structural. The advanced manufacturing processes required for high-bandwidth memory (HBM) and other AI-optimized memory technologies cannot be rapidly scaled. This creates a strategic bottleneck that extends far beyond typical market fluctuations.

Perhaps the most significant shift Mehrotra articulated—and one that resonates deeply with our research findings—is the evolution of memory from a commodity component to a strategic asset. For decades, memory was treated as an interchangeable part, purchased primarily on price with minimal differentiation between suppliers. That era has definitively ended. Today’s memory technologies underpin everything from massive hyperscale data centers powering AI models to edge computing deployments bringing intelligence closer to end users.

Twelve years ago, I spoke at a gathering of memory manufacturers in Colorado Springs, Colorado, where I urged them to think beyond their role as mere suppliers and become strategic partners to their customers. At the time, I couldn’t foresee how artificial intelligence would eventually reshape the industry, but I did notice that many of their customers were beginning to adopt longer-range planning and explore how memory could give their products a competitive edge. Back then, memory was still viewed largely as a commodity.

Today, that perception has completely changed—and with it, the way organizations must operate. Memory is no longer a simple line item in a bill of materials; it has become a key driver of system performance, power efficiency, total cost of ownership, and competitive differentiation. Companies that understand this transformation and evolve their procurement and partnership strategies accordingly will secure a decisive advantage over those still treating memory as a commodity.

The strategic nature of modern memory demands a fundamentally different mindset. Organizations must move beyond transactional purchasing toward deeper technology partnerships with memory suppliers. This means engaging earlier in product development cycles, understanding roadmaps more thoroughly, and making longer-term commitments that align with strategic business objectives. It also requires cross-functional collaboration, bringing together procurement, engineering, and strategic planning teams in ways that many organizations haven’t traditionally structured.

The capacity shifts toward high-value memory products that Mehrotra described also deserve attention. Manufacturers are making calculated decisions to prioritize production of advanced memory types—HBM, DDR5, and specialized AI-optimized products—over legacy technologies. This deliberate reallocation reflects where the industry sees sustainable value creation, but it also intensifies supply constraints for organizations still dependent on previous-generation memory technologies.

Looking ahead, the memory market’s evolution presents both challenges and opportunities.

The tight supply environment will likely persist through much of 2026 and possibly beyond, requiring organizations to develop more sophisticated sourcing strategies, including strategic inventory management and diversified supplier relationships. Simultaneously, the performance and efficiency gains available through next-generation memory technologies create opportunities for significant competitive differentiation.

Mr. Mehrotra’s insights at Davos serve as a clear signal: memory has entered a new era. Organizations that recognize its strategic importance, invest in appropriate partnerships, and align their technology strategies with this reality will be better positioned to capitalize on the AI-driven transformation reshaping the technology landscape. The question is no longer whether memory matters strategically—it’s whether your organization is prepared to treat it that way.

Many investors are convinced that memory and storage companies are still locked in the old boom-bust cycle, making it now a spectacular selling opportunity. Maybe they are right, but the CEO of Micro Technology, now one of three memory companies valued at over $1 trillion, believes that the industry will never be the same again since the advent of the age of AI. Personally, I think the easiest assumption is to accept what he says.

Meanwhile, this clash of views is making shares in memory companies unbelievably volatile. In three days, shares in NAND flash memory producer, SanDisk, fell from US$1862 to $1516. At that rate, they would be practically nought in two weeks. This is particularly significant because there is an excellent case for believing that even at $1862, they are far too cheap and should be valued at nearer $3,000 or even $4,000.

The structural changes that have occurred in the memory industry have made SanDisk one of the fastest-growing companies I have seen in 60 years of following stock markets, and SanDisk CEO, David Goeckeler, believes that in Q3 of fiscal 2026, for a year ending 30 June 2026, marked an inflexion point for the company (and by implication the industry).

This quarter marks a fundamental inflection point for Sandisk — where our technology leadership is enabling a deliberate shift in our mix toward the highest-value end markets, led by Datacenter,” said David Goeckeler, CEO of Sandisk. “We are also advancing to a new business model built on multi-year customer engagements backed by firm financial commitments. Together, this transformation is driving structurally higher and more durable earnings power,” continued Mr. Goeckeler. “With a zero-debt balance sheet, strong cash generation, and a recently authorized share repurchase program, we are positioned to deliver substantial long-term value creation for our shareholders.

This incredible share price volatility offers opportunities for investors to pick up cheap shares or add to their holdings on these ferocious dips. Just buy some more on any wild down day, like Friday when SanDisk was down over $200.

Share Recommendations

Samsung. SMSN

S K Hynix. 000660

Micron Technology. MU

SanDusk. SNDK

Kioxia. 285A

Seagate Technologies. STX

Western Digital Corporation. WDC

Strategy – Keep Buying The Memory Magnificent Seven

Fortune favours the brave. In late 2025, around October, an incredible ‘something new’ happened in the memory industry as an explosive source of new demand, AI data factories, transformed the business. All the indications are that this new source of demand is here to stay, and memory products for data centres are a world away from the simpler products required for laptops and mobile phones.

This is an incredible opportunity for the leading companies in the industry, and all the signs are that they are grabbing it with both hands. All investors must do is be believers; have faith, hold the shares you have and, if you want to, buy more.

Be thankful that there are so many non-believers out there who are keeping these shares cheap. I can easily see SanDisk reporting earnings per share of $200 or even higher over the next year or two, which means the fastest growing company in the world could be on a single figure PE ratio.

Another thing that strikes me is that there are many predictions out there for the size of the market by 2030, how much additional supply may come on stream, and annualised growth rates for years to come. The only thing that we can be certain about is that all these predictions are wrong. They are delivered with great authority but are much like sticking a wet finger in the air.

The only hard facts in investment are what is happening now. The future is a mystery, so educated guesses by laymen are as likely to be right as the pontifications of the experts. This layman guesses that there is plenty of life in the memory boom for one simple reason: a huge new customer with extremely demanding requirements, AI infrastructure, has arrived and is growing explosively from almost a standing start.