Soaring prices for memory and storage components have turned companies like Sandisk, Micron Technology and Western Digital into the hottest stocks in the market over the past year. But they\u2019re causing headaches for many of their customers.<\/p>\n
Hardware companies from Apple Inc. to HP Inc. are under pressure, as their need for expensive memory components becomes an investing risk \u2014 one that isn\u2019t expected to reverse anytime soon.<\/p>\n
\u201cThey\u2019re in a tough position,\u201d said Rob Thummel, senior portfolio manager at Tortoise Capital, which has $9.1 billion in assets and runs an exchange-traded fund dedicated to AI infrastructure. \u201cThey basically have two options: They can take a hit to margins, which the market won\u2019t like. Or they can raise prices to offset the higher memory costs, running the risk of hurting demand.\u201d<\/p>\n
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<\/p>\nThe Sandisk headquarters in Milpitas, California, on 7 January .<\/p>\n<\/div>\n
The surging demand for memory has contributed to what the technology research firm IDC calls \u201can unprecedented memory chip shortage,\u201d which it sees as a \u201ccrisis\u201d for device manufacturers as supply shortages lead to skyrocketing prices for the chips.<\/p>\n
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Apple shares rose just 8.6% in 2025, their worst performance since 2022, and they\u2019re down 4.4% to start this year, putting them among the 20 weakest stocks in the Nasdaq 100 Index. HP shares closed Wednesday at their lowest level since November 2020 after losing nearly a third of their value in 2025 and sinking another 6.8% in the early days of 2026. And Dell Technologies Inc. has dropped 28% since hitting an all-time high in October.<\/p>\n
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Rising memory prices are also a risk for chipmakers that provide semiconductors for smartphones, as noted in recent downgrades of Qualcomm Inc. by Mizuho Securities and Arm Holdings Plc by Bank of America.<\/p>\n
\u201cSo long as memory prices stay high, and we expect prices to stay high for a while given the AI demand, the market could continue punishing them,\u201d Thummel said. Among the group, he\u2019s only positive on Dell, as growth in its server business offsets the memory headwind.<\/p>\n
In contrast, memory and storage companies have charged out of the gate in 2026, with Sandisk, Western Digital, Micron and Seagate Technology Holdings Plc building on their 2025 rallies. Sandisk is leading the S&P 500 to start the year, up more than 60%, with Western Digital and Micron among the index\u2019s top 20 performers.<\/p>\n
Results from Samsung Electronics Co last week showed that average selling prices for dynamic random-access memory, or DRAM, chips jumped more than 30% quarter over quarter, while non-volatile flash memory, or NAND, chips rose about 20%. The higher prices \u2014 which are expected to continue throughout 2026, if not longer \u2014 contributed to Samsung\u2019s profits, which more than tripled.<\/p>\n
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\u201cFor an industry that has long been characterised by boom-and-bust cycles, this time is different,\u201d IDC analyst Francisco Jeronimo wrote in a December report. \u201cThis is not just a cyclical shortage driven by a mismatch in supply and demand, but a potentially permanent, strategic reallocation of the world\u2019s silicon wafer capacity.\u201d<\/p>\n
Memory can account for between 10% and 20% of the material costs in consumer-facing hardware such as smartphones, according to Jeronimo. Hedgeye Risk Management last week said it had \u201cless conviction\u201d on Apple as the memory issue became more concerning.<\/p>\n
The ramifications for personal computer manufacturers are expected to be even more severe. In November, HP\u2019s profit outlook missed expectations, and during its conference call company executives estimated that projected increases in memory costs would reduce its 2026 adjusted earnings per share by 30 cents.<\/p>\n
HP is \u201cthe most exposed name in our coverage to secular pressures on PC margins and demand,\u201d Goldman Sachs analyst Katherine Murphy wrote in a note to clients on Tuesday. She expects increased pricing actions taken to offset higher input costs from things like memory chips to have a \u201cmaterial impact\u201d on PC purchases from lower-end consumers, where HP has more exposure than Dell, in the second half of 2026.<\/p>\n
The consensus estimate for HP\u2019s 2026 net earnings per share has been slashed by 7.1% over the past month, according to data compiled by Bloomberg. Dell also noted the impact of rising memory prices in its results, though its estimates have held up better as the company\u2019s server business sees strong demand amid the AI buildout.<\/p>\n
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\u201cOver the next two years, the rise in the cost of memory components will be so much that it will even ding a company the size of Apple,\u201d said Paul Meeks, managing director and head of technology research at Freedom Capital Markets. \u201cThe good news is that memory prices are cyclical, but there\u2019s so much scarcity in supply that I don\u2019t expect a reversion back in the other direction anytime soon.\u201d<\/p>\n
Tech chart of the day<\/span><\/h3>\n![\"\"](\"https:\/\/www.moneyweb.co.za\/wp-content\/uploads\/2026\/01\/447632500-555x325.jpg\")
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ASML Holding NV shares soared to a record high, sending its market value beyond $500 billion, after its key customer Taiwan Semiconductor Manufacturing gave a stronger-than-expected outlook for 2026.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
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