AI investment now represents over 25% of US GDP growth, marking a record high that has triggered worries about a potential bubble in the memory chip market.
Memory chip stocks such as SanDisk, SK Hynix, and Micron are facing bearish reversal patterns following a strong rally in 2026. This downturn has been particularly pronounced, with Bank of America's Bubble Risk Indicator for semiconductor stocks reaching 0.91 out of 1 on July 1, leading to a 6.4% drop in the SOXX chip ETF.
The Kobeissi Letter highlights the unprecedented level of dependence on AI funding, noting that it now surpasses contributions seen during the dot-com peak. For context, every $4 of economic growth in the US is now influenced by AI advancements.
Despite these challenges, analysts show ongoing confidence in major players, with target prices for SanDisk set at $2,200 by Goldman Sachs and $3,100 by Evercore, driven by tight NAND pricing. Institutional flows also hint at quiet accumulation, as evidenced by positive Chaikin Money Flow (CMF) metrics for Samsung, SK Hynix, and Micron.
However, not all indicators are positive. SanDisk's CMF has recently dipped towards the zero line, suggesting decreasing buyer interest. Currently trading at $1,673, SanDisk is forming a second double top pattern, which points towards potential further declines, with crucial levels to monitor at $1,520 and $1,418.
On the other hand, SK Hynix's stock, now priced at 1,913,000 won (approximately $1,276), has breached the neckline of a head-and-shoulders pattern, forecasting a possible decrease of about 32%. The price movements across these stocks indicate increasing volatility in the memory chip sector as investors reassess their strategies.
This material is for informational purposes only and is not financial advice.
