Shares of memory and data storage companies—Micron (MU) and SanDisk (SNDK)—tumbled on Thursday as investors reacted to Google’s (GOOGL) unveiling of TurboQuant, a new compression algorithm designed to reduce memory requirements for AI systems. The announcement has raised concerns that future demand for DRAM and NAND memory could be lower than previously expected, triggering a selloff across the sector. On Thursday, MU stock was down by 7%, while SNDK fell 11%.
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Forget margin or options. Here's how the pros trade STXOther memory players, including Western Digital (WDC) and Seagate Technology (STX), were down over 7%. Meanwhile, Asian counterparts Samsung Electronics (SSNLF) and SK Hynix closed down 4.71% and 6.23%, respectively, on Thursday. With memory stocks having surged so far this year, they remain vulnerable to developments like TurboQuant that could curb future demand.
Google TurboQuant Could Change AI Memory Usage
According to Google’s technical release, TurboQuant is an algorithm that uses vector quantization to reduce memory overhead. It compresses data in AI models without sacrificing accuracy or requiring retraining, lowering memory storage needs in data centers.
TurboQuant is expected to have minimal impact on HBM (High Bandwidth Memory) compared to standard DRAM (Dynamic Random-Access Memory). The algorithm mainly optimizes AI model inference, which primarily uses ordinary DRAM, while HBM is still essential for AI training.
Analysts Weigh In on TurboQuant
Lynx Equity Strategies analyst KC Rajkumar believes this is unlikely to significantly reduce memory or flash demand over the next 3–5 years due to tight supply constraints. He added that TurboQuant relieves bottlenecks without destroying overall demand for DRAM or flash memory.
Rajkumar reaffirmed his $700 price target on MU stock and stated that he would be a buyer on the recent pullback.
Meanwhile, Wells Fargo analyst Andrew Rocha stated that as AI models need more memory, TurboQuant could cut those costs—potentially reducing demand for extra memory. However, it’s unclear if the technology will be widely adopted beyond Google or if lab results will hold up in real-world use.
Which Memory Chip Stock Offers Highest Upside, According to Analysts?
Using TipRanks’ Stocks Comparison tool, we compared major memory chip stocks. Among these stocks, MU stock offers the highest upside of 51% at a price target of $537 with a Strong Buy rating. On the other hand, SNDK and WDC have the lowest upside, at around 16%.
