Memory stocks have had quite the year in 2026. Two of the best performers are Sandisk (NASDAQ: SNDK) and Micron (NASDAQ: MU), which are each among the top five best-performing stocks in the S&P 500 (SNPINDEX: ^GSPC) this year.
Sandisk holds second place, rising around 270%, while Micron has risen about 150%. However, I think both of these stocks are due for more over the next few years, and all investors have to do is listen to what they’re saying.
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I think these two will be great stocks to buy and hold over the next few years, and could deliver monster returns.
Both stocks are incredibly cheap versus the broader market
Memory chips are required for many devices to function. Long-term data storage utilizes NAND memory, such as in solid-state drives (SSDs). Computing units need DRAM memory to function, and these are being deployed heavily in data centers for computing power.
While memory chips are necessary, there isn’t much to differentiate one memory chip from another. With no competitive advantage, memory chips basically became a commodity. As a result, pricing depends heavily on supply and demand. This makes memory chips a cyclical industry, and investors have historically given companies in these fields deep discounts to avoid losing vast sums of money when the cycle turns.
That’s what the market is betting will happen for Micron and Sandisk. With the AI build-out in full force and consuming all available memory, demand for chip production capacity for their products has never been higher. With production capacity sold out, prices have also skyrocketed. This has led to ludicrous growth rates for each company, but the market isn’t valuing them fully because of their cyclical nature.
MU PE Ratio (Forward) data by YCharts
For reference, the S&P 500 trades at 19 times forward earnings, so if both stocks just had a market-average valuation, they would rise nearly 5 times in value. But because the market is betting on a downturn, they’re cheap.
The memory chip industry is being reshaped
Both of these companies are taking steps to reduce the cyclical nature of their businesses. Instead of selling products on the open market, both are now entering into long-term agreements with their clients. Sandisk calls this its “New Business Model” (NBM), and a large chunk of its revenue is coming from these agreements. Micron is doing the same thing and has locked in approximately 35% of revenue through 2030 with these types of contracts.
