ETD

Memory chip stocks are having a difficult week, and Qualcomm's latest earnings have given investors another reason to be cautious. Micron (NASDAQ:MU), Sandisk (NASDAQ:SNDK), and SK hynix (NASDAQ:SKHY) are extending their losses in overnight trading, each falling around 2.5%. The additional selling follows a turbulent regular session that saw Micron tumble 7%, Sandisk lose 8%, and SK hynix retreat 5%.

While Wednesday's initial selloff followed sweeping Democratic victories in the U.S. midterm elections, which raised concerns about tighter restrictions on data-center construction, the overnight weakness comes after Qualcomm released disappointing smartphone sales figures. The chip maker plunged about 9% in extended trading, raising concerns that weakening consumer electronics demand could eventually affect the memory industry.

Qualcomm's Earnings Add to Memory Industry Concerns

Qualcomm's fiscal fourth-quarter results weren't entirely disappointing, with adjusted earnings of $2.17 per share exceeding Wall Street's $2.16 estimate. Revenue reached $10.32 billion, surpassing expectations of $10.12 billion, although the annual comparison showed an 8% contraction.

The biggest concern involved handset operations, where sales plunged 26% year-over-year to $5.14 billion. Although Apple's transition toward internally developed modem chips contributed to the weakness, softer smartphone demand also raises concerns for manufacturers supplying DRAM and NAND components.

Meanwhile, rising memory prices have made mobile devices more expensive to manufacture, potentially affecting future production volumes. Qualcomm also projected fiscal first-quarter adjusted earnings between $2.15 and $2.35 per share, compared with analysts' expectations of $2.29.

Although its revenue guidance of $10.4 billion to $11.2 billion exceeded consensus at the midpoint, investors appeared more concerned about weakening handset sales and profitability. For Micron, Sandisk, and SK hynix, these developments add another risk to an industry already facing uncertainty surrounding AI infrastructure spending.

Micron: Record Earnings Haven't Stopped the Selling

Micron has benefited tremendously from growing demand for high-bandwidth memory, an essential component of advanced AI processors. Its fiscal fourth-quarter revenue reached $54.23 billion, representing 379% annual growth, while adjusted gross margin climbed to 87%.

The semiconductor manufacturer also projected fiscal first-quarter revenue of $61.5 billion, reflecting continued strength in data-center investments. Furthermore, Micron indicated that over 75% of its shipments are committed for the year, providing greater visibility into future sales.

Nevertheless, Qualcomm's weak handset figures raise concerns about another important source of demand for the Idaho-based manufacturer. Although AI infrastructure remains its primary growth engine, slower consumer electronics purchases could complicate expectations for conventional DRAM products.

Wall Street remains bullish despite these concerns, awarding Micron a Strong Buy consensus rating based on 28 Buys and one Hold. Its average 12-month price target of $1,621.67 suggests about 104% upside from Wednesday's closing price. (See MU stock forecast)

Sandisk: Strong Results Meet NAND Pricing Concerns

Sandisk faces particular uncertainty owing to its heavy exposure to NAND flash memory, widely used in smartphones, computers, and cloud storage systems. The company recently reported fiscal first-quarter revenue of $11.03 billion, representing 378% annual growth, alongside adjusted earnings of $49.51 per share.

These results exceeded expectations, supported by robust purchasing activity among cloud customers expanding their computing infrastructure. However, concerns surrounding the sustainability of NAND price increases have weighed on investor sentiment throughout recent sessions.

Japanese manufacturer Kioxia recently issued a disappointing outlook, raising worries that pricing momentum could weaken following months of rapid appreciation. Qualcomm's handset figures introduce an additional complication, as slower smartphone production could eventually reduce purchases of storage components.

Wall Street apparently sees Sandisk's recent selloff as a buying opportunity, with 15 analysts recommending Buy against just 3 staying on the sidelines. The average price target of $2,080.59 points to a potential 100% rebound from Wednesday's closing level. (See SNDK stock forecast)

SK hynix: Record Profits Offer Some Reassurance

SK hynix has also suffered from the broader semiconductor selloff despite reporting record third-quarter financial results in late October. The South Korean manufacturer generated revenue of 104.6 trillion won, supported by strong demand for advanced memory products and rising component prices.

Operating profit reached 83.3 trillion won, reflecting the company's growing importance within the global AI supply chain. More importantly, SK hynix secured long-term agreements with 14 large customers covering over half its planned production capacity for 2027 and 2028.

These commitments provide greater visibility into future demand, although uncertainty surrounding semiconductor spending remains an important consideration. Qualcomm's latest results suggest consumer electronics weakness could persist, potentially affecting conventional memory purchases despite continued orders from tech developers.

Still, Wall Street remains unanimously bullish, with all 9 analysts covering SKHY recommending purchases and supporting its Strong Buy consensus. The average 12-month price target of $268.50 indicates about 88% upside from Wednesday's closing price. (See SKHY stock forecast)