TTT

TradingKey - Pre-market on Thursday (October 29) Eastern Time, memory stocks pulled back collectively following a sharp rebound in the previous trading session. The pre-market decline in the memory sector came as Samsung Electronics' latest earnings report fell short of the market's high earnings expectations, sending its stock price from an initial gain into a drop of over 6% at one point and dampening sentiment toward global memory stocks.

As of press time, Micron (MU) fell about 3.5% pre-market, SanDisk (SNDK) dropped about 4.1%, Western Digital (WDC) fell about 3.8%, Seagate (STX) fell about 3.7%, and SK Hynix US ADR (SKHY) fell about 3.1%.

Micron pre-market stock price movement, Source: FUTUBULL

Previously, SK Hynix reported record quarterly results on Wednesday, with third-quarter revenue reaching 104.62 trillion Korean won and operating profit reaching 83.33 trillion Korean won, a year-on-year increase of 632%. The company also stated that customer bookings have largely secured DRAM and HBM supply for the next few years. Expectations of sustained tight memory chip supply previously drove shares of memory sector companies, including SK Hynix, Micron, and SanDisk, sharply higher.

On Thursday, sentiment in the memory sector began to weaken after Samsung Electronics released its earnings. Samsung's third-quarter revenue reached 195.3 trillion Korean won and operating profit reached 107.4 trillion Korean won, but net profit came in at 75.1 trillion Korean won, missing market expectations of 89.06 trillion Korean won. The company's stock price had risen nearly 3% before the earnings announcement before reversing rapidly into a decline, with intraday losses widening to 6.2% at one point.

Meanwhile, overall weakness in US tech stocks overnight further amplified pullback pressure on memory stocks. Alphabet (GOOGL) plunged 9.99% in after-hours trading following its earnings release, refocusing market attention on the returns from large tech companies' rapidly accelerating AI infrastructure spending. As demand for HBM, DRAM, and enterprise SSDs is closely tied to AI server and data center capital expenditures, such concerns also triggered profit-taking in memory stocks that had surged in the previous trading session.

However, major memory manufacturers have not significantly changed their assessment of industry demand. Samsung stated that AI servers continue to drive demand growth for HBM, server DRAM, and enterprise SSDs, and projected that AI-related memory demand will still exceed industry supply in 2027. SK Hynix also previously expected memory supply tightness to potentially persist for a longer period. Therefore, today's sector decline reflects more of a short-term repricing driven by high earnings expectations, while the price, shipment, and capital expenditure guidance provided by companies going forward will continue to determine the sustainability of industry fundamentals.

Notably, SanDisk will be a key stock to watch in the memory sector today, as the company is scheduled to report its first-quarter fiscal 2027 financial results after the US market close on October 29. Investors need to focus on NAND prices, enterprise SSD demand, profit margins, and next-quarter guidance. The company previously issued first-quarter revenue guidance of $10.3 billion to $10.8 billion, with adjusted earnings per share expected to be $44 to $46.

Find out more