Micron Technology and Sandisk got crushed last week after Alphabet's Google detailed an algorithm called TurboQuant that the market feared would dent demand for memory chips. Investors should tune out the noise, according to Mizuho Securities.

Mizuho analyst Vijay Rakesh reiterated Outperform ratings on both Micron and Sandisk in a research note, counseling traders to "buy the TurboQuant memory pullback." Rakesh maintained a $710 price target for Sandisk and a $530 target for Micron.

Sandisk shares were up 0.3% at $695 on Thursday after falling sharply at the open, while Micron slipped 0.6% to $365.73. President Donald Trump's address Wednesday evening weighed on stocks in the premarket session as investors were left without clarity on when the Iran war will end. Both stocks have fallen by double-digits from their respective all-time highs last month.

While the macro environment doesn't help, TurboQuant is the industry-specific story behind Micron and Sandisk's recent struggles. The compression algorithm reduced "key value memory size" in artificial-intelligence models by at least six times and lifted speeds up to eightfold, without compromising model accuracy, Google researchers said.

Mizuho sees that as a good thing for memory stocks. Performance improvements accelerate the adoption of AI, Rakesh argued, strengthening demand for components like memory chips. This dynamic has been dubbed Jevons' Paradox in the industry.

The kind of data compression promised by TurboQuant "will enable larger [large-language models], faster inference and better tokenomics, spurring more spending," Rakesh wrote.

Most importantly, NAND memory content in AI servers has doubled over the last year and spot pricing continues to soar each quarter. The mix of price increases and strong demand mean both Micron and Sandisk could beat already-high estimates moving forward, Mizuho argued.