Beware the boom and bust cycle of memory stocks, investors warn amid AI boom

A SK Hynix flag (R) and a South Korean national flag (L) flutter outside the company's Bundang office in Seongnam on Jan. 26, 2024. Jung Yeon-je | Afp | London — Outsized returns for memory-related stocks have helped fuel substantial gains in U.S. and South Korean equity markets in recent years — but market watchers warn investors forget the market's cyclicality at their own risk. The memory industry has been in a period of sustained growth since the launch of ChatGPT in December 2022, which triggered huge demand for high-bandwidth memory, or HBM. Samsung and SK Hynix are among the largest producers of HBM chips, and their stock prices have soared 114% and 186% higher year-to-date, respectively. US-based Micron Technology and SanDisk have each advanced 141% and 156% in 2026. Central to the thesis underpinning the bull run in memory stocks is the belief that the industry has shaken off its past cyclicality, whereby demand for storage fluctuates significantly while supply remains largely fixed. Executives have argued that AI has upended the industry's history of boom and bust, and a structural supply shortage means that prices could stay high for years. William de Gale, portfolio manager at BlueBox Asset Management, told CNBC's Europe Early Edition on Wednesday that the industry tends to have "enormous ups and downs". "In the long run it's a pretty dreadful industry," he said. …