By Micron, SK Hynix and SanDisk shares traded higher on Friday as a rebound in the broader semiconductor sector lifted investor sentiment following a technology-led selloff in the previous session.
Micron MU gained more than 3%, while SK Hynix rose over 4% and SanDisk advanced 1.4%.
The Philadelphia Semiconductor Index, also known as the SOX, climbed more than 1% as chip stocks recovered from Thursday’s losses.
The rebound followed a sharp pullback in technology shares on Thursday as investors assessed the implications of rising borrowing costs and heavy corporate debt issuance for artificial intelligence and other technology investments.
The SOX fell 6.7% on Thursday, its worst daily performance since June 23, while Micron lost about 6%.
SK Hynix’s decision to abandon plans for a US initial public offering of its Solidigm business also supported sentiment toward memory-chip stocks on Friday, with analysts pointing to potential implications for future NAND flash supply.
Solidigm IPO cancellation eases supply concerns
The planned Solidigm IPO had been expected to raise as much as $15 billion and value the business at roughly $150 billion.
Its cancellation was viewed as shareholder-friendly for SK Hynix because the company will retain full exposure to Solidigm’s growth potential.
The decision has also shifted investor attention toward SK Hynix’s third-quarter earnings release, due later this month, when management is widely expected to announce enhanced shareholder return commitments.
For Micron and SanDisk, the cancellation could have implications beyond investor sentiment.
According to LYNX Equity Strategies, the IPO would have provided Solidigm with capital to finance additional NAND manufacturing capacity in the United States.
That expansion could have increased global supply in three or more years, potentially putting pressure on NAND prices and competing suppliers.
In an October 23 note, the analyst team led by KC Rajkumar said the scrapped IPO removes a potential source of funding for future capacity expansion.
“The overhang of new capacity addition to the global supply of NAND flash has been eliminated,” LYNX wrote.
The firm said the development would ordinarily represent a material positive for Micron and SanDisk, both suppliers of NAND flash memory, because slower capacity growth could support industry pricing and valuations.
However, it cautioned that broader market conditions could limit the impact on share prices.
Analysts divided over semiconductor weakness
Market strategists offered differing assessments of the recent decline in semiconductor shares.
Chris Verrone, chief market strategist at Strategas, told CNBC that the weakness appeared technical rather than fundamental, suggesting any further pullback could be short-lived.
“Fundamentally, we’re seeing great strength, but technically, there’s some pressure on these semiconductors, and if the pressure continues, it could take the market on a little leg lower, which I think will be quick and a great buying opportunity,” he said.
However, John Mowrey, chief investment officer at NFJ Investment Group, took a more cautious view of memory stocks and the South Korean market, which is heavily exposed to the sector.
Micron outlook remains positive for some analysts
DA Davidson maintained a positive outlook on Micron after attending a webcast focused on the company’s upcoming innovations and competitive position in the memory market.
Managing director and technology research head Gil Luria said the company’s technological advantages were not fully reflected in its valuation.
“We see Micron as having a leadership position in memory technology, with far wider moats than are implied by the current valuation,” Luria said in a note on Wednesday.
The firm reiterated its Buy rating and $3,000 price target.
“Memory is integral to the AI product,” Luria wrote, adding that greater memory content and bandwidth could allow AI systems to operate at a higher level.
DA Davidson also highlighted Micron’s presence across three key memory technologies: dynamic random-access memory (DRAM), NAND and high-bandwidth memory (HBM).
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