Two Leading Semiconductor Stocks Driving Market Momentum in 2026

Key Points

Two stocks have defined the market so far in 2026: Sandisk (NASDAQ: SNDK) and Micron (NASDAQ: MU). These two are leading the S&P 500 (SNPINDEX: ^GSPC) in performance and have been the stocks to own this year.

Micron is lagging a bit behind Sandisk, only rising 242% so far this year. Sandisk is leading the way at 635% growth, though that figure was more than 800% a few days ago before recent tech stock sell-offs.

These two are as dynamic as market leaders get, yet they remain roughly 20% below their recent all-time highs.

If you missed the initial surge, current valuations may present an opportunity to enter as the same growth drivers are expected to persist through late 2026 and beyond.

Image source: Getty Images.

The memory chip market remains constrained

Both Micron and Sandisk are memory chip manufacturers. Memory chips are essential for data storage in computers, smartphones, and other devices, including GPUs powering AI data centers. These chips are used universally across computing hardware.

While memory types vary by application, manufacturers face little differentiation, creating a highly commoditized market sensitive to supply-demand imbalances.

Unprecedented demand from data center expansion caught the industry off-guard, leading to constrained supply and soaring prices that significantly boosted revenues for both companies. However, investors worry about potential demand declines in the future.

That concern may be overstated. During Micron’s latest earnings call, management projected “tight conditions” in DRAM and NAND markets to continue beyond 2027. This is driven by: first, continued AI-driven data center expansion by hyperscalers, and second, delays in new manufacturing facilities coming online, which won’t fully ramp until 2027.

Regardless, the forces fueling these stocks’ 2026 rally remain intact, with potential for continued gains through late 2026 and into 2027.

Valuation metrics suggest opportunity

Due to the commoditized nature of memory chips and historically low growth expectations, these stocks traded at low valuations—1x to 2x forward earnings ratios—last year.

SNDK PE Ratio (Forward) data by YCharts

Despite their sharp price increases, both stocks still trade below 14x forward earnings, significantly cheaper than the S&P 500’s 21.7x multiple. This undervaluation suggests substantial upside potential, with some analysts projecting the stocks could double over the next 12 to 18 months.

They warrant consideration as investments, though investors must closely monitor pricing power risks, as any indication of declining margins could trigger sell-offs. Management forecasts suggest such pressure remains distant, supporting a strategic buy opportunity.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Source link