AI memory stocks like Micron MU and SK Hynix SKHY have been among Wall Street’s top performers, fueled by a chip shortage and surging demand. Lately, though, both stocks have come under pressure as investors doubt how long AI-related spending can last and worry about growing competition.
The latest trigger came from China’s ChangXin Memory Technologies (CXMT), which announced progress over the weekend on a new DRAM architecture. The company claims it could raise memory density by 30-50%, letting more data fit into the same physical space.
Still, the selloff may be overdone. CXMT’s advances could heighten competition down the road, but the company is yet to show it can mass-produce these chips at scale, and established memory makers retain a technological edge.
Additionally, hot inflation print stokes fears of costlier financing for AI data centers.
For investors, this dip could be a buying opportunity rather than a cause for alarm. Over the past five trading sessions, Micron has fallen about 10% and SK Hynix about 13%. Yet one of the two stands out as a clear buy right now. Let’s take a closer look at both stocks to see which one deserves your money today.
The Case for SK Hynix
AI models need huge amounts of computing power, which in turn drives demand for memory that can shuttle data quickly between processors and storage. SK Hynix has carved out a leading position in high-bandwidth memory (HBM), the chips used in AI accelerators from companies like NVIDIA. Ties with major tech customers give it broad exposure to the AI infrastructure buildout.
The company is also staying ahead of the next phase of the cycle. Mass shipments of its latest HBM4 have begun, with output set to ramp through the rest of the year. Samples of the upgraded HBM4E are already out, underscoring its push to protect its technology edge.
The numbers show how strong demand has been. Second-quarter 2026 revenues reached 79.32 trillion won, up 257% year over year, while operating profit jumped 557% to 60.54 trillion won.
The balance sheet is solid too, with roughly 88 trillion won in cash at quarter-end. In August, SK Hynix unveiled a 40-trillion-won ($28.7 billion) buyback-and-cancellation program and said it intends to return over half of its 2025-2027 cumulative free cash flow to shareholders.
It is also expanding capacity, planning about 54 trillion won ($38 billion) of domestic memory investment plus a $4 billion U.S. packaging facility. These moves could help it capture more demand, but execution and heavy capital spending remain key concerns.
Take a look at how SK Hynix’s EPS estimates have moved over the past 60 days.
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The Case for Micron
Micron wrapped up fiscal 2026 with record revenues, high margins and strong cash generation, and the outlook looks even better. For the fiscal first quarter of 2027, it expects revenues of $61.5 billion (plus or minus $1.5 billion) and adjusted EPS of $38.15 (plus or minus $1). That implies roughly 351% revenue growth and 698% earnings growth year over year.
HBM is a key driver. In the fiscal fourth quarter, HBM revenues outpaced Micron’s overall growth, and most of its 2027 HBM supply is already contracted at notably higher prices. The HBM4 ramp is on track, and the company is developing a custom HBM4E solution with NVIDIA.
NAND is a second engine. Data center SSD revenues neared $10 billion in the last reported quarter, more than 10 times the prior year, as applications like KV-cache offload boost demand for fast storage. Longer term, autonomous vehicles and humanoid robots should require far more memory and storage than today’s devices.
Micron is also working to make this upcycle last. It has signed 26 Strategic Customer Agreements, expected to make up over 35% of revenues through 2030. Customer financial commitments have grown to $32 billion, mostly as cash deposits.
New capacity is coming across the United States, Singapore, Japan and Taiwan, with Singapore HBM packaging starting in early 2027 and the ID1 fab in mid-2027. Heavy capital spending and slower price increases are risks, but the long-term story looks intact.
Take a look at how Micron’s EPS estimates have moved over the past 60 days.
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Our Take
Both companies are riding the same AI-memory cycle, but Micron offers the better risk-adjusted entry. Most of its 2027 HBM supply is already contracted at higher prices, backed by customer commitments under long-term strategic agreements. SK Hynix’s results are exceptional, but it is more levered to the upcycle, and its largely Korea-centered expansion, with 2026 capex expected in the high KRW 40 trillion range, would magnify margin pressure if HBM or DRAM pricing normalizes before new capacity is fully utilized. Meanwhile, Micron’s NAND diversification and broader manufacturing footprint add resilience.
Between the two stocks, Micron has a clear edge and makes a compelling long-term buy. MU has a Zacks Rank #1 (Strong Buy) and a VGM Score of A, while SKHY has a Zacks Rank #3 (Hold) and a VGM Score of C.
You can see the complete list of today’s Zacks Rank #1 stocks here.
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