Key Points
Memory company SK Hynix said it's essentially sold out of its available memory through 2029.
The memory market continues to boom as tech companies invest in building AI infrastructure.
This boom should continue to benefit Micron for the foreseeable future.
Investors have been wondering when the memory market will revert to its typical boom-and-bust cycle. But SK Hynix's (NASDAQ: SKHY) blockbuster third-quarter results are easing fears of a slowdown and delivering good news to Micron Technology (NASDAQ: MU) shareholders that demand for memory processors is nowhere near slowing down.
SK Hynix's sales soared 328% to $78.9 billion, and operating profit spiked 632% to $62.3 billion. Importantly, the company's leadership said memory orders have surpassed its supply for the next three years.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Here's what that means for the broader memory market and, specifically, for Micron shareholders.
Image source: The Motley Fool.
Fears about an imminent memory slowdown are fading
Tech investors have been wondering for a while now when the surge in memory demand will taper off and when the supply-and-demand imbalance will normalize. Memory prices have gone through boom-and-bust cycles in the past, leading to soaring share prices for memory stocks that subsequently come crashing back down.
But that doesn't appear to be what's happening right now, and it could be several more years before memory supplies match demand. Indeed, SK Hynix's management said that it "expects the structure in which demand exceeds supply to persist through 2030."
The company believes that as more companies use AI, they'll be more productive, leading to more use of AI, resulting in more AI infrastructure needs. "SK Hynix analyzed that a virtuous cycle has taken hold in which AI-driven productivity gains and new revenue generation in areas such as software development, customer service, and search lead to greater AI adoption, which in turn drives increased investment in infrastructure," the company noted in its press release.
That contrasts with estimates by some analysts that memory shortages would begin to ease in 2028 as more memory manufacturing capacity comes online.
This long-term trend could continue to boost Micron stock
Micron's share price popped the day after SK Hynix released its quarterly results, but it's the long-term demand for memory that could provide continued momentum for Micron's stock.
Tech investors have been trying to figure out when memory demand will start slowing down, and about a week ago, they sent Micron's shares tumbling on fears that AI infrastructure investments aren't paying off for some companies.
But tech giants will spend an estimated $1.3 trillion on AI infrastructure in 2027, and the more they spend, the more likely that some of that money will go toward Micron's memory processors.
Micron is already riding this wave; its sales jumped 379% to $54.2 billion, and earnings per share spiked 811% to $75.52 in the fourth quarter of fiscal 2026.
And with SK Hynix now saying its memory supply is essentially sold out through 2029, it's likely Micron is experiencing similar demand. SK Hynix holds about 25% of the global DRAM memory market, and Micron has 24%, according to Counterpoint Research.
Memory demand is strong, but keep an eye on this
Calling the end of the memory demand cycle is clearly premature, given that Micron investors continue to receive positive news from both the company's financial results and the broader memory market.
But at some point, tech companies won't need to build so many data centers, or they'll find more efficient ways to utilize the ones they have. No one knows when that will happen, but if you're a current Micron shareholder and have experienced significant gains from your investment, it could be a good idea to evaluate what percentage of your portfolio is currently allocated to memory stocks.
Micron's share price has surged 1,400% over the past three years. And while it could go higher based on persistent memory demand, keeping too much of your investment in this area probably isn't a good idea. That doesn't mean you should sell Micron right now, but it could be a good idea to spread your investments around to other areas of the market as well.
Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.