Jim Cramer's AI Chip Call: Why Memory Giants Can Still Climb Higher

The semiconductor market is in the grip of an unprecedented supply crunch that’s reshaping investor sentiment. Leading investment analyst Jim Cramer recently highlighted how memory chip producers are positioned to benefit from this structural imbalance. Two companies at the center of this story—Micron Technology and Sandisk—have already delivered stunning returns since early 2023, yet Cramer argues there’s still room for further appreciation based on supply dynamics.

The core argument is straightforward: demand for memory and storage is outpacing industry production capacity. This shortage has created a favorable environment where even established players can expand market share and defend pricing power. AI data center buildouts have accelerated this demand surge, fundamentally reshaping the supply-demand equation.

Supply Crunch Fuels AI Data Center Demand Boom

The shortage of memory chips isn’t temporary—it reflects deep structural imbalances in the industry. Customers are accelerating their AI infrastructure investments, creating sharp demand spikes that manufacturing capacity simply cannot match in the near term. This dynamic creates a multi-year tailwind for well-positioned producers.

According to CEO Sanjay Mehrotra of Micron, the company’s customers’ AI buildout plans have driven forecasts higher, with management expecting “aggregate industry supply will remain substantially short of the demand for the foreseeable future.” This isn’t optimistic talk—it’s a reflection of real customer conversations and visibility into demand pipelines.

The implication is significant: companies gaining market share during this shortage period are positioning themselves for sustained competitive advantages. Those losing share face margin compression and customer defection.

Micron Technology: Capturing Share While Valuations Stay Reasonable

Micron has delivered impressive operational momentum. In its most recent quarter, revenue jumped 20% to $13.6 billion, while adjusted gross margins expanded 17 percentage points—a clear sign of pricing leverage. Earnings surged 167% to $4.78 per diluted share, demonstrating the operating leverage inherent in this market.

What makes Micron particularly interesting is market dynamics. While Samsung and SK Hynix are losing ground, Micron is capturing share in both DRAM and NAND flash memory. The company gained 10 percentage points of market share in high-bandwidth memory (HBM) alone over the past year—a critical category for AI training and inference workloads.

From a valuation perspective, Wall Street expects 37% annual earnings growth through fiscal 2029, which puts the current 32 times earnings multiple into reasonable territory. This isn’t an obvious bargain, but the growth profile justifies the multiple. Micron’s combination of market share gains, pricing power, and strong forward growth makes it a compelling opportunity.

Sandisk: Growth Trajectory Compelling but Valuation Stretched

Sandisk tells a different story on valuation metrics, despite showing genuine operational progress. The company expanded NAND market share by 2 percentage points over the past 12 months, ranking fifth but benefiting as competitors lose ground. Most importantly, two major hyperscalers have begun testing Sandisk enterprise storage solutions, with others planning to follow—a significant validation of technology and competitiveness.

Recent financial results showed 23% revenue growth to $2.3 billion, though earnings initially declined 33% in the quarter. However, management guided for sequential earnings to nearly triple in the subsequent quarter, suggesting a temporary trough rather than sustained pressure. Analysts are forecasting 79% annual earnings growth through fiscal 2029.

Here’s where the math gets concerning. At 170 times forward earnings, Sandisk carries a premium multiple that leaves little room for disappointment. Consider that the stock has already surged 1,050% since the company’s separation from Western Digital in early 2025. The extraordinary move has left valuation very stretched relative to peers.

The Cramer Thesis: Selective Exposure to Memory Chips

Jim Cramer’s framework offers a useful lens for thinking about positioning: not all beneficiaries of the supply shortage are equally attractive at current prices. Both companies operate in favorable markets where demand exceeds supply, but valuation discipline matters.

Micron presents a more balanced risk-reward profile. The company is gaining market share while trading at a multiple justified by growth rates. Management’s confidence in sustained supply shortages is backed by actual customer conversations, not speculation. This combination of operational momentum, competitive position, and valuation makes Micron a reasonable consideration for investors seeking exposure to memory chip demand.

Sandisk’s situation is more nuanced. The operational trajectory is positive—hyperscaler validation and market share gains suggest the company can execute. But after a 1,050% move in roughly one year, the valuation has become unforgiving. The 79% growth forecast would need to persist for several years just to justify current multiples, leaving limited margin for error. At these levels, the risk-reward skews unfavorably despite genuine business strength.

The supply shortage supporting both companies is real and likely durable. The question for investors isn’t whether the market will remain favorable, but whether current valuations appropriately reflect that favorable environment.