On Wednesday, shares of SanDisk Corp. and Micron Technology experienced significant declines, becoming notable underperformers amid a major sector rotation. Investors are moving capital away from the semiconductor sector, which had strong performance in the first half of the year, and into areas perceived as offering greater value.

As of afternoon trading Eastern Time, SanDisk Corp. shares plunged approximately 10%, while Micron Technology fell over 8%. Despite this, their year-to-date gains remain substantial: SanDisk Corp. is still up more than 760% for the year, leading the S&P 500, and Micron Technology has gained over 270% over the same period. This sharp pullback is occurring against a backdrop of pressure on the tech-heavy Nasdaq index, with capital accelerating into blue-chip sectors like the Dow Jones Industrial Average, indicating a broadening market.

Analyst Perspectives on Supply Dynamics

However, several analysts believe that severe supply shortages in memory chips will continue to provide support for share prices. In a report issued Wednesday, analyst Wamsi Mohan noted that NAND flash demand is projected to outstrip supply through mid-2027, suggesting SanDisk Corp. should maintain strong pricing power. He concurrently raised his price target for SanDisk Corp. from $2,100 to $2,500, implying roughly 22% upside from current levels.

Potential Market Shifts and Their Impact

Recent reports that Apple is seeking U.S. government permission to source DRAM chips from Chinese supplier ChangXin Memory to reduce costs have sparked concerns about a potential supply shock. Analysis suggests, however, that even with new Chinese capacity entering the market, it is unlikely to fundamentally alter the supply-demand imbalance in the near term, as the overall market remains in a state of shortage.

Long-Term Outlook for the Sector

While the current market rotation is creating near-term pressure for chip stocks, the core fundamentals for the memory sector remain supported by structural demand growth driven by AI and persistent supply tightness.