Why Jim Cramer Believes These Memory Chip Stocks Are Worth the Attention

The semiconductor industry is experiencing a pivotal moment. Memory chip manufacturers are facing unprecedented demand, and CNBC’s seasoned investment commentator Jim Cramer sees substantial opportunities for investors. Cramer, who built his reputation managing funds with 24% annual returns over 14 years, recently highlighted two memory-focused semiconductor companies that have already delivered extraordinary returns but may not be finished appreciating: Micron Technology and Sandisk. Since January 2023, these stocks have delivered 625% and over 1,000% gains respectively. Yet according to Cramer’s analysis, their valuations may still offer merit for patient investors.

The Supply Crunch Creating Unprecedented Opportunity

At the heart of Cramer’s bullish thesis lies a fundamental market imbalance. The semiconductor industry cannot produce enough memory chips to satisfy explosive demand from artificial intelligence data centers. This constraint directly benefits companies positioned to expand their production capacity and capture market share.

The nature of this shortage is different from previous cycles. Customer demand for AI infrastructure has spiked dramatically in recent months, creating visibility into years of strong demand ahead. Equipment manufacturers cannot scale production fast enough to meet these requirements. For semiconductor companies with existing capacity and the ability to acquire manufacturing tools, this represents a rare competitive advantage. Cramer’s reasoning is straightforward: companies gaining market share during supply-constrained periods establish relationships and market positions that prove durable even when supply normalizes.

Micron: Market Share Gains Support the Valuation

Micron Technology develops memory solutions serving personal computers, mobile devices, data centers, and automotive systems. The company produces DRAM and NAND flash memory—the two most critical memory technologies for AI workloads. What distinguishes Micron from industry giants Samsung and SK Hynix is its aggressive pursuit of market share despite being the third-largest player in both categories.

Over the past year, Micron captured 10 percentage points of market share in high-bandwidth memory (HBM)—a specialized DRAM product essential for artificial intelligence. Simultaneously, the company is gaining NAND flash market share while larger competitors lose ground. This trajectory validates the company’s ability to win business during favorable supply conditions.

Micron’s most recent quarterly results reinforce Cramer’s confidence. Revenue climbed 20% to $13.6 billion, gross margins expanded by 17 percentage points (demonstrating pricing power), and adjusted earnings surged 167% to $4.78 per share. CEO Sanjay Mehrotra emphasized that the supply shortage remains severe: “We believe the aggregate industry supply will remain substantially short of demand for the foreseeable future.”

Wall Street projects Micron’s earnings will expand 37% annually through fiscal 2029. At 32 times forward earnings, the valuation appears reasonable relative to growth expectations. Cramer’s assessment aligns with this view—investors should consider building a position in this name before the supply advantage becomes common knowledge.

Sandisk: Growth Without Valuation Comfort

Sandisk manufactures NAND flash storage solutions built on solid-state drive technology. NAND flash has become the memory of choice for AI applications where performance exceeds cost considerations. Unlike traditional hard drives, SSDs deliver faster access speeds and greater reliability—critical attributes for AI training and inference workloads.

Sandisk’s market position has been solidifying. The company gained 2 percentage points of NAND market share over the past year, climbing from a fifth-place ranking while industry leaders Samsung, SK Hynix, and Kioxia each lost at least 2 points. Micron was the only other notable share gainer—suggesting that smaller, nimble competitors are capturing valuable ground during this supply shortage.

Financial performance appears encouraging. First-quarter revenue increased 23% to $2.3 billion, driven by robust data center and edge computing demand. Yet earnings decreased 33% to $1.22 per share, raising near-term concerns. However, management expects earnings to nearly triple in the subsequent quarter as production ramps and revenue scales.

The opportunity appears legitimate. Two major hyperscale data center operators recently began testing Sandisk enterprise SSDs, while additional hyperscalers plan trials this year. Market researchers at Counterpoint note that Sandisk is among the few companies gaining market share, suggesting genuine competitive strength.

The valuation challenge cannot be ignored, however. Wall Street estimates adjusted earnings will climb 79% annually through fiscal 2029, yet the current stock trades at 170 times forward earnings—markedly expensive by any historical standard. Sandisk has appreciated 1,050% since spinning off from Western Digital, creating an extraordinary valuation. While future growth may ultimately justify current prices, the risk-reward profile looks unfavorable after such a dramatic run.

What Makes These Stocks Worth Watching Now

Jim Cramer’s thesis rests on recognizing temporary market conditions that reward well-positioned competitors. Micron offers growth with reasonable valuation, making it a candidate for portfolio consideration. Sandisk presents genuine business momentum but demands either substantial future growth or significant patience before the valuation becomes comfortable.

The broader lesson from Cramer’s analysis: extraordinary returns often emerge when supply constraints create durable advantages for market-share-gaining companies. These two semiconductor stocks represent that dynamic—though investors must recognize that current valuations already reflect significant upside, and future returns depend on execution against ambitious growth expectations.