Mizuho Securities is pushing back against the recent sell-off in Micron Technology and SanDisk Corp., suggesting investor concerns about a potential peak in the memory cycle may be overstated. In a report to clients, analyst Vijay Rakesh stated that the weakness in these two stocks likely reflects market sentiment rather than fundamentals, pointing out that structural demand drivers related to artificial intelligence are more likely to persist and strengthen than diminish.

Rakesh highlighted recent advancements in AI efficiency, including TurboQuant—initially explored in 2025—which now shows more results indicating improved inference performance, as well as newly released algorithms from Google. He argued that such progress could reinforce a familiar pattern: greater efficiency drives increased usage. He cited historical cycles, such as how virtualization ultimately boosted server demand, and how AI growth accelerated around the 2025 launch of DeepSeek, despite initial fears of a slowdown.

Looking ahead, Rakesh identified several technological shifts that could further support memory demand. These include the transition from copper cables to optical networks with significantly higher bandwidth—a move he believes may increase, rather than decrease, capital expenditure on AI servers. He also noted that KV cache compression technology is expected to support larger language models, faster inference speeds, and better token economics, potentially driving incremental spending across the ecosystem. Mizuho maintained its Outperform ratings on Micron Technology and SanDisk Corp., with price targets of $530 and $710, respectively, suggesting the current pullback may represent a buying opportunity rather than a signal of a structural peak.