Four memory stocks ride AI boom, but differ in key ways: CNBC

These four stocks all rank among the S&P 500's 10 best performers this year, fueled by booming demand for memory and storage to support AI data center buildouts. Sandisk leads the way, soaring about 575% year to date. Micron is up 240%, followed by Seagate's roughly 210% gains and Western Digital's more than 170% rise. Since the start of 2025, Micron has surged about 920%, Western Digital is up 820%, and Seagate is up nearly 740%, compared with a 25% gain for the S&P 500. Sandisk, which began trading independently in February 2025, has soared more than 4,300%.

The group began its massive run as hyperscalers accelerated spending on AI data centers, sending demand for memory and storage soaring. Supply could not keep pace, creating shortages that gave producers tremendous pricing power and helped propel earnings — and their stocks — higher. That momentum intensified into 2026 before reversing sharply in recent weeks, leaving the four stocks roughly 20% to 40% below their late-June peaks.

While they all have benefited from the same AI spending boom, they occupy different parts of the memory and storage ecosystem. The easiest way to distinguish them is through the trade-off between speed and cost across three main technologies: DRAM, NAND flash memory and hard disk drives. DRAM is Micron's bread and butter — the fastest and most expensive of the three. NAND, Sandisk's sole focus and also part of Micron's business, is slightly slower but cheaper. Hard disk drives, made by Seagate and Western Digital, offer even slower access but are the cheapest way to store huge amounts of data.

Importantly, these technologies are not necessarily substitutes for one another. "Modern computers and data centers need all of them," D.A. Davidson analyst Gil Luria told CNBC. "They do different things." Micron CEO Sanjay Mehrotra echoed that point, saying AI is creating demand across the memory and storage ecosystem. "AI is driving a whole hierarchy of memory requirements, from high-bandwidth memory to DRAM to SSDs, and this is the exciting era for memory and critical need that all AI systems have," Mehrotra said on "Squawk on the Street" on Thursday, appearing with Jim Cramer from the site of the company's planned $10 billion research facility in Boise, Idaho.

Micron sells both DRAM and NAND, but its DRAM business has become increasingly important as AI demand accelerates. DRAM is essentially a computer's short-term working memory, holding data that processors need to access quickly while performing calculations. DRAM is also the type of chip stacked to make high-bandwidth memory, or HBM. HBM acts like an ultra-wide data highway designed to rapidly move enormous amounts of data to and from graphics processing units and central processing units, making it fundamentally important to training and running increasingly sophisticated AI models. "It's more important to the data center than CPUs are," Luria said.

Mehrotra, an engineer by trade who has worked in the chip industry for over 40 years and previously co-founded Sandisk, said AI has fundamentally changed the memory business. "Today there is no AI without memory. AI systems need more memory. They need higher performance memory. They need lower power memory," he told Jim on "Mad Money." "So, the value of memory, that equation has totally changed." Luria made a similar point, arguing that memory has become part of the computing engine itself. "It's no longer just storage," he said. "It's actually how the model works. It's the guts of the model now. It's not just a periphery. It's not an accessory."

That is an important distinction for Micron, as memory has historically been considered a commodity. Micron, along with South Korea's SK Hynix and Samsung Electronics — the world's three major DRAM producers — had competed largely on price, contributing to the brutal boom-and-bust cycles that have long characterized the industry. Now, instead of customers simply soliciting bids and buying from whichever supplier offers the lowest price, HBM must increasingly be designed alongside the processors and systems in which it will operate. That creates deeper relationships between memory suppliers and customers and greater visibility into future demand.

Mehrotra said Micron still cannot produce enough to satisfy demand. "All our customers across our end markets will buy everything that we make," the CEO said.