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• This week’s rebound has injected fresh confidence into the memory and semiconductor trade.
• The Roundhill Memory ETF (DRAM) rose 10.9% on Tuesday, its best single-day move in over a month.
• Over half of the retail traders who voted in a Stocktwits poll believe the memory selloff is over, while 24% believe pressures might persist.

Memory and semiconductor stocks posted strong gains on Tuesday, extending this week’s rebound after recent losses driven by a tech rotation and demand fears fueled by low-cost Chinese AI models.

SanDisk stock rose 14.3%, while Western Digital and Micron Technology rose 12.5% and 12.2% respectively, to emerge as the top three gainers in the S&P 500 index.

The Roundhill Memory ETF (DRAM) rose 10.9%, its best single-day move in over a month. Chipmaker Intel was a standout, rising 8.6% ahead of its earnings report Thursday. The iShares Semiconductor ETF (SOXX) rose 5.5%, also the best move in over a month.

Semiconductor shares continued gains in the overnight session, boosted by strong preliminary results from Super Micro Computer. The AI server seller said it received a record $60 billion in new orders in its fiscal fourth quarter and expects gross margins to rise sharply higher than its own projections.

China AI Fears Pressure US Chip, AI Stocks

This week’s rebound has injected fresh confidence into the memory and semiconductor trade. Chip stocks had been under pressure lately as investors fret about low-cost Chinese AI models. 

Last week, China’s Moonshot AI released Kimi K3, an open-source model that its maker claims matches leading closed U.S. models despite being developed with far fewer financial and computing resources. 

The launch reignited debate over whether rival AI developers are over spending on infrastructure, and whether the success of more compute-efficient models could curb demand for the high-end chips powering companies such as Anthropic and OpenAI.

Retail Traders Say Memory Rout Is Over

Still, the rebound, coming just as the second-quarter tech earnings are about to kick off with Alphabet's report on Wednesday, is shoring up sentiment.

About 53% of nearly 3,000 voters in an ongoing Stocktwits poll believe the selloff in memory stocks has largely run its course. Twenty-four percent believe the weakness might persist, while 23% voted that it is too early to tell.

“What we witnessed was the overleveraged get washed out. Institutions got to buy at a discount. Now, those that waited and bought the dips will be rewarded.. Fundamentals haven't changed at all. Tale as old as time,” a trader wrote in the comments.

Another trader presented a cautionary view, citing looming market risks from the U.S.-Iran war and a potential interest rate hike. 

On Stocktwits, the retail sentiment was ‘bullish’ for MU and SNDK, and ‘bearish’ for WDC and DRAM – unchanged from the previous day.

Micron Remains Key

On Tuesday, Bank of America named Micron as one of its best investment ideas, and raised its price target on the stock to $1,550 from $1,500 while reiterating its ‘Buy’ rating. Analyst Vivek Arya framed the recent chip pullback as a "summer reset" rather than a fundamental reversal.

The target implies a 60% upside from MU’s closing price on Tuesday.

“$MU can absolutely deliver the $400 Billion in FCF that UBS cited this week. Demand, margin profile, and sustained capex buildout are the setup. Futurum Equities reiterates its buy and $1,550 PT,” The Futurum Group CEO Daniel Newman said in an X post.

With the gains so far this week, Micron has climbed over 240% year to date, while SanDisk is up 570%.

For updates and corrections, email newsroom[at]stocktwits[dot]com.<