NVIDIA CEO Jensen Huang stated in August that his company could sell more chips if it had more compute, a constraint that highlights the tight supply chain for AI infrastructure. This bottleneck extends to memory and storage components, driving significant year-to-date gains for Micron Technology and SanDisk alongside NVIDIA.
The three companies are trading at elevated levels after substantial increases in earnings estimates. NVIDIA shares have risen 27.67% year-to-date, while Micron is up 255.25% and SanDisk has gained 585.46%. Huang added that AI is generating profitable tokens, linking the company's performance to the broader expansion of artificial intelligence workloads.
NVIDIA currently trades at 15 times its fiscal 2028 earnings per share estimate of $15.6951. The company reported a fifth consecutive quarterly beat in August, with earnings of $2.22 per share against a consensus of $2.09. The earnings estimate has increased from $12.7102 over the past 90 days, reflecting improved outlooks for the chipmaker.
Micron Technology trades at 6 times its fiscal 2027 earnings per share estimate of $176.6868. This figure has risen from $150.0075 in the last 90 days. In its most recent quarter, Micron posted earnings of $33.42 per share, exceeding the estimate of $31.35 to mark its eighth consecutive beat. The stock's performance has been fueled by strong demand for memory chips essential to AI computing.
SanDisk shares trade at 8 times its fiscal 2027 earnings per share estimate of $213.9030, up from $193.7201 three months ago. The company reported fourth-quarter earnings of $39.25 per share, surpassing the estimate of $33.28 for a fifth straight beat. SanDisk has seen a 1,242.87% rise over the past year, outpacing both NVIDIA and Micron in annual performance.
Investors are weighing these gains against potential risks in the sector. Memory pricing remains cyclical, and NVIDIA's current outlook excludes data center compute in China. Additionally, a union at Micron in Taiwan recently won approval to strike, which could affect operations. Despite these factors, the companies' consistent earnings beats and rising estimates support their current valuations.
The AI supply chain depends on a balance between computing power, memory, and storage. As demand for AI services grows, the availability of these components becomes a primary driver for stock performance in the semiconductor sector.