The memory stock cycle of boom-bust-repeat is over, executives say

The recent surge in artificial intelligence spending is transforming the memory industry in unprecedented ways. Over the past year, Micron's share prices have skyrocketed by more than 370%, while Sandisk, which made its market debut in February of last year, has seen an astonishing increase of over 1100%. For years, memory stocks experienced a repetitive cycle of boom and bust, but industry executives now assert that the AI revolution has fundamentally altered this pattern, with prices showing no signs of declining. Hewlett Packard Enterprise CEO Antonio Neri emphasized in an interview with CNBC that the industry is likely to continue increasing prices. "There is not enough supply to meet the demand," he stated. This sentiment was echoed by an executive from Seagate, who indicated that rising memory prices may soon be considered the standard for the foreseeable future. South Korea's SK Hynix, a leading memory manufacturer, reported to CNBC that the entire sector is undergoing significant structural changes. A spokesperson noted that customers, particularly hyperscalers, are increasingly opting for long-term contracts instead of the traditional one-year deals. Micron has also confirmed that clients are eager to secure long-term supply agreements to ensure access to memory resources for years ahead. Broadcom's CEO, Hock Tan, mentioned during a recent earnings call that his company has secured supply commitments extending through 2028. The current demands of AI workloads necessitate a memory architecture that is more intensive and complex than what the industry was previously configured to handle. Meta, for instance, announced a new in-house AI chip last Wednesday, raising concerns regarding its access to high-bandwidth memory. Meta's Vice President of Engineering, Yee Jiun Song, expressed their worries about securing sufficient supply but is optimistic about having locked in the necessary resources for their future projects. With hyperscalers dominating the market and no significant relief expected until at least 2027, the AI expansion appears to have ushered memory products into a new and stable phase.