Memory Stocks Are Plummetting. Jensen Huang Says the Bears Have It Wrong.

Memory stocks have been experiencing a sharp decline in recent weeks, with companies like Micron, SK Hynix, Samsung, and SanDisk all seeing significant drops in their stock prices. This sell-off is attributed to fears over rising debt yields and the cyclical nature of memory chips. Despite continuing to report strong results, memory stocks have already fallen by roughly a third from their peak last July.

However, Nvidia CEO Jensen Huang has stepped in to defend the AI sector, stating that he doesn't expect an oversupply of memory until sometime after 2029. He emphasized that memory is always in demand and that his company will continue to develop new ways to use it to improve performance. Micron's strong margins, reaching as high as 86.8% in its most recent quarter, suggest that the pricing in the memory market is near its peak.

While it's uncertain how long the current shortage will last, there are concerns about the sustainability of these high margins. If Micron can maintain its current profit levels for at least three years, its current valuation may be justified, making it a potentially attractive long-term investment.