Soaring prices for memory and storage components have turned companies like Sandisk Corp., Micron Technology Inc. and Western Digital Corp. into the hottest stocks in the market over the past year. But they’re causing headaches for many of their customers.
Hardware companies from Apple Inc. to HP Inc. are under pressure, as their need for expensive memory components becomes an investing risk — one that isn’t expected to reverse anytime soon.
“They’re in a tough position,” 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. “They basically have two options: They can take a hit to margins, which the market won’t like. Or they can raise prices to offset the higher memory costs, running the risk of hurting demand.”
The surging demand for memory has contributed to what the technology research firm IDC calls “an unprecedented memory chip shortage,” which it sees as a “crisis” for device manufacturers as supply shortages lead to skyrocketing prices for the chips.
Apple shares rose just 8.6% in 2025, their worst performance since 2022, and they’re down 4.2% 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 26% since hitting an all-time high in October.
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.
“So 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,” Thummel said. Among the group, he’s only positive on Dell, as growth in its server business offsets the memory headwind.
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 about 75%, with Western Digital and Micron among the index’s top 20 performers.
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 — which are expected to continue throughout 2026, if not longer — contributed to Samsung’s profits more than tripling.
“For an industry that has long been characterized by boom-and-bust cycles, this time is different,” IDC analyst Francisco Jeronimo wrote in a December report. “This is not just a cyclical shortage driven by a mismatch in supply and demand, but a potentially permanent, strategic reallocation of the world’s silicon wafer capacity.”
Memory can represent between 10% and 20% of the material costs in consumer-facing hardware like smartphones, according to Jeronimo. Hedgeye Risk Management last week said it had “less conviction” on Apple as the memory issue becomes more concerning.
The ramifications for personal computer manufacturers are expected to be even more severe. In November, HP’s 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.
HP is “the most exposed name in our coverage to secular pressures on PC margins and demand,” 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 “material impact” on PC purchases from lower-end consumers, where HP has more exposure than Dell, in the second half of 2026.
The consensus estimate for HP’s 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’s server business sees strong demand amid the AI buildout.
“Over 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,” said Paul Meeks, managing director and head of technology research at Freedom Capital Markets. “The good news is that memory prices are cyclical, but there’s so much scarcity in supply that I don’t expect a reversion back in the other direction anytime soon.”
Vlastelica writes for Bloomberg.
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