This article first appeared on GuruFocus.
Mizuho Securities is pushing back against the recent selloff in Micron Technology (NASDAQ:MU) and SanDisk (NASDAQ:SNDK), arguing that investor concerns around a potential peak memory cycle could be overstated. In a note to clients, analyst Vijay Rakesh suggested the weakness in both names may reflect sentiment rather than fundamentals, pointing to structural demand drivers tied to artificial intelligence that could continue to build rather than fade.
Rakesh highlighted recent progress in AI efficiency, including TurboQuantfirst explored in 2025with additional results now showing improvements in inference performance, alongside newly released algorithms from Google (NASDAQ:GOOG). He argued that these types of advancements may reinforce a familiar pattern where better efficiency drives greater usage, referencing prior cycles where virtualization ultimately increased server demand and where the DeepSeek launch in 2025 coincided with accelerating AI growth despite initial concerns about a slowdown.
Looking ahead, Rakesh pointed to several technology shifts that could further support memory demand, including the transition from copper to optical networking with significantly higher bandwidth, which he believes may increase AI server capital expenditures rather than reduce them. He also noted that KV cache compression could enable larger language models, faster inference, and improved token economics, potentially driving incremental spending across the ecosystem. Mizuho maintains Outperform ratings on both Micron and SanDisk, with price targets of $530 and $710, respectively, reflecting a view that the current drawdown may present a buying opportunity rather than a signal of a structural peak.
