Perhaps those worried about the sell-offs in momentum memory chip stocks such as Micron (MU) and Sandisk (SNDK) should read the second quarter earnings release from auto giant General Motors (GM).
Because it sure looks like the memory chip supply shortage driving up prices is alive and well, despite market fears of a slowdown.
Quick insight: GM posted better-than-expected second quarter earnings on Tuesday before the opening bell on Wall Street. For the second time this year, GM lifted its full-year profit forecast despite higher memory chip costs and tariff impacts.
But GM’s guidance for $1.5 billion to $2 billion commodity inflation and higher DRAM (aka memory chips) costs was initially lost in the headlines. This range from three months ago was reiterated, but it remains higher than the $1 billion to $1.5 billion guidance coming into 2026.
What’s behind the move: The memory chip market is tightening as demand for high-bandwidth memory (HBM) and advanced DRAM used in AI servers continues to outpace supply.
Companies such as SK Hynix (SKHY), Samsung Electronics (005930.KS), and Micron have largely sold out their premium AI memory capacity through much of 2026 as customers, including Nvidia (NVDA), Microsoft (MSFT), Amazon (AMZN), and Meta (META), race to build AI infrastructure.
The shortage has pushed memory prices sharply higher and given suppliers greater pricing power after several years of weak industry conditions. Experts expect memory supply to remain constrained into 2027, creating a favorable backdrop for the industry’s largest producers.
That backdrop has powered the share price of Micron to a record high in late June. But the stock has dropped 25% from the highs on concerns that AI demand has begun to slow, creating fears of future overcapacity for memory chip players.
The sell-off has extended to traditional semiconductor names such as Broadcom, too, with its stock down 8% in the past month per Yahoo Finance AlphaSpace data. The pullback has brought Broadcom’s forward price-to-earnings multiple down to 19.8 times, below the three-year average of 29 times, according to AlphaSpace.
The bottom line: GM has been able to offset higher DRAM costs through cost cuts and better pricing on full-size trucks. As long as it can continue to do this, it should be well placed to deliver on its upwardly revised full-year guidance.
As for memory chip stocks, GM just reinforced the reason investors were bullish in the first place.
Brian Sozzi is Yahoo Finance’s Executive Editor, host of the ‘Power Players With Brian Sozzi’ podcast and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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