In a dramatic shift in market sentiment on Thursday, memory and storage suppliers staged a significant rally, collectively adding roughly $239 billion in market capitalization by late morning. This surge was fueled by robust customer commitments to Micron Technology, while five major AI-linked megacaps experienced a combined loss of approximately $417 billion, signaling a pivot in investor focus from AI demand to pricing power within the semiconductor supply chain.
The divergence highlights a growing recognition that tight memory supply and rising component costs are reshaping the competitive landscape. Companies that can deliver capacity and secure long-term contracts are being rewarded, while platform and device makers face higher input costs and increased scrutiny on spending.
Micron's Strategic Deals Propel Memory Sector
Micron Technology (NASDAQ:MU) emerged as a standout, reporting 16 strategic customer deals worth $22 billion in commitments, backed by take-or-pay clauses, cash upfront, and price floors. The company also disclosed approximately $100 billion in outstanding performance obligations. CEO Sanjay Mehrotra characterized the results as evidence of the "strategic value of memory in the AI era." In an interview with Reuters, Mehrotra indicated that tight memory supply is likely to persist beyond 2027.
The memory rally extended to other suppliers, including SanDisk (NASDAQ:SNDK), Western Digital (NASDAQ:WDC), and Seagate Technology (NASDAQ:STX). Including Qualcomm (NASDAQ:QCOM), the sector's total market cap gain approached $247 billion.
Qualcomm's Ambitious Targets Boost Sentiment
Qualcomm provided an additional boost to supplier stocks after raising its fiscal 2029 non-handset revenue goal to $40 billion, doubling its earlier target. The company also set a data-center revenue goal exceeding $15 billion. CEO Cristiano Amon described the move as "defining Qualcomm's next chapter." Qualcomm revealed that Microsoft (NASDAQ:MSFT) and Meta Platforms (NASDAQ:META) are using its new AI chips, and two unnamed hyperscalers have signed up for custom chips. CFO Akash Palkhiwala emphasized the company's diversification, while data center chief Tony Pialis noted that hyperscale customers have been "pulling us in."
Apple and Nvidia Slide Amid Cost Pressures
On the other side of the trade, Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA), Microsoft, Alphabet (NASDAQ:GOOGL), and Oracle (NYSE:ORCL) collectively shed around $417 billion in market value. Apple, in particular, faced pressure after implementing price hikes on iPads and MacBooks, raising the MacBook Neo's base price to $699 from $599. The company attributed the increases to soaring memory and storage chip costs, stating, "We have never seen a component price increase this much, this quickly."
DRAM prices surged up to 98% in the first quarter, with another 58% to 63% increase expected this quarter, according to TrendForce data cited by Reuters. Apple CEO Tim Cook had warned in April that rising memory costs would hit harder after June.
Market Context and Broader Implications
The Nasdaq 100 bounced after a two-day selloff that erased close to $1.3 trillion in market value at the start of the week, as reported by Bloomberg. Dan Ives of Wedbush described the sharp move lower as "gut check moments," while Michael O'Rourke of JonesTrading called the heavy tilt toward chip stocks "somewhat alarming."
In early trading, eight of the 11 main S&P 500 sectors were up, led by industrials, with advancers outpacing decliners on both the NYSE and Nasdaq. The iShares Semiconductor ETF (NASDAQ:SOXX) added about 2.8% by late morning, while the SPDR S&P 500 ETF (NYSEARCA:SPY) and Invesco QQQ Trust (NASDAQ:QQQ) also traded higher.
Michael Monaghan, a partner and portfolio manager at Founder ETFs, noted that investors now "like the recipients of the spend" and have moved against the companies that are doing the spending. The shift underscores a market increasingly focused on companies with pricing power and supply chain leverage.
Long-duration growth stocks remain under pressure from interest rate concerns. May PCE inflation landed at 4.1%, while first-quarter GDP growth was revised to 2.1%, according to Reuters. Michele Morganti, senior equity strategist at Generali Investments, suggested there is still a possibility that the Federal Reserve could hike rates again this year, adding another layer of uncertainty for high-valuation stocks.
