Cramer Says Micron, Sandisk, Seagate Memory Stocks Can Rally Further
Key Points
- Sandisk surged 653% this year, Seagate jumped 261%, Micron gained 254%, and Western Digital climbed 211% in 2024.
- Jim Cramer said on Monday that memory makers are now disciplined, securing long-term customer agreements instead of expanding capacity aggressively.
- Cramer's Investing Club recently initiated a position in Micron and he believes it can double again before the AI boom ends.
Share Buybacks Signal Industry Discipline
Share repurchase activity provides evidence that the memory industry has learned from past cycles, Cramer argued. Sandisk has $15.5 billion remaining under its share repurchase authorization, while Seagate is working through a $5 billion buyback program announced last year. Western Digital authorized an additional $4 billion in share repurchases earlier this year. "They're taking that money and sending it to you, the shareholder, rather than investing in new capacity," Cramer said.
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Cramer's Charitable Trust, the portfolio run by CNBC's Investing Club, recently initiated a position in Micron, which he favors for its growth potential despite the stock's dramatic rally. "I think Micron can double again before the boom comes to the end, assuming there's no data center slowdown," Cramer said.
Cramer acknowledged the discomfort of buying after such a dramatic rally and that the data center buildout may eventually slow, potentially leading memory manufacturers to add too much capacity again. However, he contended that such an overbuild will not occur imminently. "I can't see the overbuild happening any time soon, so why not own one of these memory stocks," Cramer said. He cautioned against assuming these companies are destined to repeat their historically cyclical patterns simply because they have in the past. "Sometimes the opportunity is too great and you can't afford not to take it," Cramer said.
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The memory sector has historically followed boom-and-bust cycles over decades, but Cramer's argument rests on the premise that structural constraints—including data center buildout bottlenecks and disciplined capacity planning by manufacturers—create conditions where demand may sustain valuations longer than traditional analysis would suggest. This matters because it affects whether investors treat memory stocks as cyclical plays requiring careful timing or growth-inflected bets on sustained AI infrastructure buildout.
What This Means
If memory manufacturers maintain discipline on capacity expansion and long-term customer agreements lock in margins as Cramer suggests, memory stocks could continue outperforming for 12-18 months. However, the risk remains that data center buildout eventually slows, triggering the same oversupply cycles that have historically compressed memory sector valuations. Investor conviction will depend on whether quarterly earnings call guidance confirms sustained demand without aggressive capacity additions.
Sources: CNBC and other international news outlets.
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