Micron (NASDAQ:MU) and SanDisk (NASDAQ:SNDK) shares are kicking off the week on a positive note, with both stocks up close to 5%, after Melius Research analyst Ben Reitzes initiated coverage with Buy ratings, laying out a thesis that reframes memory as a core pillar of the AI buildout rather than a cyclical afterthought.
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New trading tool for SNDK bullsAt the core of the move is Reitzes’ view that the market is still underestimating how critical memory has become in an AI-driven world, where demand is no longer just about PCs or smartphones but about feeding increasingly complex models and systems. The analyst argues that the “AI memory cycle could keep going through the end of the decade,” as customers place a higher value on supply reliability and performance.
That shift, in his view, opens the door to a different kind of business model for memory companies, one that looks more like recurring infrastructure revenue than traditional commodity exposure. Reitzes believes customers will move toward multi-year supply commitments, saying the industry is entering a phase where customers will increase their subscriptions to “multi-year supply commitments for memory,” which could support higher and more durable valuation multiples than investors have historically assigned.
This idea of “subscriptions” is central to why the stocks are reacting so strongly today, because it suggests a structural change in how revenue is generated and priced across the sector. Instead of riding volatile pricing cycles, memory producers could benefit from longer-term agreements with hyperscalers that lock in demand and provide visibility, particularly as AI workloads scale in both size and complexity.
Reitzes connects that shift directly to the rise of AI agents and more advanced computing architectures, noting that these systems require multiple layers of memory, from high-bandwidth memory for active processing to NAND for storage and retrieval. As those workloads expand, the analyst sees memory demand compounding rather than growing in a straight line, with each new layer of capability requiring additional capacity.
The analyst also highlights a broader industry imbalance that is working in memory suppliers’ favor, pointing out that supply cannot keep up easily due to long lead times for new fabrication capacity. That constraint, combined with rising demand, creates an environment where pricing holds up better and margins remain elevated for longer than in prior cycles.
When it comes to Micron specifically, Reitzes sees a company that is still being valued as a cyclical player despite sitting at the center of AI infrastructure demand. He believes margins above 70% “will last longer than consensus thinks,” and argues that the current setup could support much higher EPS than the market is modeling, with long-term agreements like “SCAs” providing additional support.
SanDisk, meanwhile, is positioned as a pure-play NAND story with growing exposure to enterprise and data center demand. Reitzes highlights its role as offering the “best NAND JV on earth,” while its vertically integrated model “should command margins reflective of each given foundries get 50–60%, chip designers get 60–75%,” pointing to stronger economics than typically associated with memory.
Wall Street is broadly aligned with the bullish take on Micron, although the tone is a bit more measured when it comes to near-term upside. The stock carries a Strong Buy consensus based on 29 analyst ratings, including 26 Buys and just 3 Holds. At the same time, the $549 average price target implies a modest ~6% upside from current levels. (See MU stock forecast)
SanDisk is also backed by a Strong Buy consensus, though the setup looks slightly more nuanced following its recent run. The stock has 15 analyst ratings, including 12 Buys and 3 Holds, however, the $1,008 average price target sits a 3% below the current share price. (See SNDK stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.