Memory chip stocks reverse 7% drop to close higher

US-listed memory chipmakers erased losses of as much as 7% to close in positive territory Thursday, as dip buyers absorbed selling pressure that had dragged the Philadelphia Semiconductor Index down 5.6% intraday.

Memory chip stocks staged an intraday reversal Thursday, with Micron Technology climbing 2.8% and SK Hynix surging 3.7% after opening 7% lower, as dip buyers stepped into a selloff that had pushed the Philadelphia Semiconductor Index down 5.6%.

"The speed and magnitude of the reversal suggest institutional buyers viewed the opening selloff as disconnected from fundamentals," said Rachel Kim, semiconductor supply chain analyst at Edgen. "Memory pricing remains constructive, and TSMC's capex raise reinforces demand visibility."

Micron Technology rose 2.8%, SanDisk gained 2.6%, Seagate Technology added 1.9% and Western Digital edged up 0.1%. SK Hynix, which has been one of 2026's best-performing chip stocks, jumped 3.7%. The Philadelphia Semiconductor Index narrowed its loss to 1.7% at 11,655 points after falling as much as 5.6% earlier in the session. The Roundhill Memory ETF, which tracks memory and storage stocks, had fallen 7% before recovering.

The reversal comes after weeks of pressure on AI-related chip stocks, with the SOX index approaching bear-market territory from its highs. TSMC, the world's largest contract chipmaker, reported quarterly results that topped analyst estimates and raised its 2026 capital expenditure forecast to $60 billion to $64 billion from $52 billion to $56 billion, signaling sustained demand for advanced chips despite the recent selloff.

A Selloff in Search of a Catalyst

Thursday's opening decline extended a rough stretch for semiconductor stocks that has erased hundreds of billions in market value. Memory and storage names had been among the strongest performers in the AI trade this year, with Sandisk up more than 500% year-to-date before the pullback. The selloff lacked a single trigger, traders said, instead reflecting positioning adjustments after a torrid rally and lingering concerns about whether AI infrastructure spending can justify current valuations.

A Bank of America survey of fund managers published this week found that many had "trimmed July tech longs to hedge AI risks" but that semiconductors remain the "world's most crowded trade," with no one willing to short the sector outright.

TSMC's Capex Raise Bolsters the Bull Case

TSMC's decision to boost its capex forecast by roughly $8 billion at the midpoint — and its plan to invest an additional $100 billion in its Arizona operations — provided a counter-narrative to the bearish sentiment that had gripped chip stocks. The company's second-quarter earnings beat analyst estimates, with revenue and profit both exceeding consensus.

For memory chipmakers specifically, the capex raise signals that demand for HBM (high-bandwidth memory, the specialized chips used in AI accelerators) remains robust. SK Hynix and Micron are the primary suppliers of HBM to Nvidia, and both have guided for tight supply through 2027.

The intraday reversal suggests the memory selloff may have been overdone relative to fundamentals. Micron trades at roughly 12x forward earnings, a discount to its five-year average, while SK Hynix's US listing, expected as soon as next month, could provide another catalyst for the sector. Investors will watch Nvidia's earnings next month for the next directional signal on AI chip demand.

This article is for informational purposes only and does not constitute investment advice.