The Recent Pullback in These 2 Stocks is an Ideal Buying Opportunity

Shares of Micron Technology (MU) and SanDisk Corporation (SNDK) have come under significant selling pressure this week as investors worry about intensifying competition from China’s ChangXin Memory Technologies (CXMT).

However, the selloff appears overdone, particularly as CXMT’s reported advancements in memory-chip technology have yet to demonstrate commercial viability at scale.

While increased competition could eventually pressure memory pricing, Micron and SanDisk remain well-positioned to benefit from surging artificial intelligence (AI) infrastructure demand.

With earnings estimates trending higher and valuations remaining remarkably attractive, the recent pullback could present an ideal buying opportunity.

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Micron vs. SanDisk: Different Memory Chip Strengths & Competitors
Although both companies benefit from the AI memory boom, their exposure differs.

Micron offers a more diversified portfolio, producing dynamic random-access memory (DRAM), high-bandwidth memory (HBM), and NAND flash memory. Its HBM chips are particularly important for AI accelerators, including those from Nvidia (NVDA), while its NAND products support rapidly expanding data-center storage needs.

Meanwhile, SanDisk is a more concentrated play on NAND flash memory and solid-state drives (SSDs), which are increasingly essential for storing and retrieving the enormous amounts of data generated by AI applications.

Notably, CXMT’s latest breakthrough involves DRAM technology, making it a more direct competitive threat to Micron than SanDisk, whose primary Chinese competition comes from NAND manufacturer Yangtze Memory Technologies (YMTC).

That said, YMTC’s competitive threat to SanDisk’s higher-value enterprise storage business remains somewhat limited by U.S. trade restrictions and its greater concentration in China’s domestic and consumer-oriented NAND markets.

Tracking the Trend of EPS Revisions
Most importantly to the buy-the-dip scenario is that Wall Street’s earnings outlook for both companies remains encouraging despite the recent selloff.

Micron’s current fiscal 2027 earnings estimates have climbed more than 12% over the past month, with the Zacks Consensus now calling for EPS to surge 135% year over year to $177.73.

Plus, FY28 EPS is projected to increase another 19% to $211.82, with estimates up nearly 12% in the last 30 days as well from $189.28 per share, despite a slight dip in the last week from $212.99.

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Meanwhile, the Zacks Consensus indicates SanDisk’s EPS could more than triple from its FY26 levels to $213.31 per share.

Better still, FY28 EPS is projected to rise another 18% to $252.80. Furthermore, FY27 and FY28 EPS estimates are still modestly higher in the last 60 days.

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Rising Earnings Estimates Support Attractive Valuations
Remarkably, MU and SNDK are trading at under 7X forward earnings, leaving both stocks at substantial discounts to the broader technology sector and the S&P 500.

While investors have historically assigned lower valuation multiples to memory-chip producers because of their cyclical earnings and volatile pricing, these discounts look increasingly compelling given the extraordinary demand for AI memory and storage.

Longer-term customer agreements could also help both companies reduce some of the earnings volatility traditionally associated with the memory industry.

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Bottom Line
Despite legitimate concerns about Chinese competition and the sustainability of memory-chip pricing, the recent selloff in Micron and SanDisk stock appears excessive relative to their underlying growth prospects.

Encouragingly, MU and SNDK are both sporting a Zacks Rank #1 (Strong Buy), supported by their favorable earnings outlooks.

With valuations remaining exceptionally attractive, now could be an opportune time for investors to buy the dip following what may prove to be a healthy correction, especially considering MU and SNDK are still up more than 200% and 400% year to date, respectively.

— Shaun Pruitt

Source: Zacks