Thanks for the memory?
The stock prices of Micron Technology Inc (Nasdaq: MU) and SanDisk Corp (Nasdaq: SNDK), two of the top publicly traded memory chip storage companies, are taking a beating this week, halting a stunning rally that began late last year.
As of Thursday morning before the market opened, Micron shares were down almost 10% over the past five days, and down 3.5% overnight.
SanDisk shares were down more than 4% over the previous five days, and down 4.4% overnight.
The broader market, on the other hand, has been flat, with the S&P 500 up barely 0.1% over the previous five days.
AI-fueled RAM memory shortage
The declines are a reversal of fortunes for the two chip stocks, which have had an incredible year so far, in large part due to a looming shortage of random access memory (RAM) storage.
That shortage is being fueled by the AI boom, which requires a lot of memory and computing power. As tech giants build out massive AI data centers to power the boom, chipmakers simply haven’t been able to keep up.
Accordingly, companies like Micron, SanDisk, Western Digital, and Seagate saw significant gains in share price.
So, what’s changed in recent days?
The single biggest factor may have to do with a recent announcement from Alphabet, Google’s parent company.
On Tuesday, the company announced TurboQuant, which it describes as “a compression algorithm that optimally addresses the challenge of memory overhead in vector quantization.”
In other words, Google thinks that it’s discovered a new method of compressing data that could reduce how much memory is required to effectively run AI models.
“TurboQuant achieves perfect downstream results across all benchmarks while reducing the key value memory size by a factor of at least 6x,” Alphabet’s announcement reads.
That means six-times less memory could be required to do the same amount of work for certain tasks in certain circumstances—and, therefore, less need for memory or RAM.
Of course, nothing concrete has come of the announcement, at least not yet.
But TurboQuant has clearly caught the industry’s attention, and that of investors, some of whom may now be seeking to lock in the profits they’ve made on chip stocks over the last several months.
Matthew Prince, CEO of Cloudflare, said on X that the TurboQuant announcement was akin to Google’s “DeepSeek moment,” a reference to the arrival of the Chinese-built, hyper-efficient LLM that hit the market more than a year ago, causing a huge sell-off in the tech sector.