Shares of memory and storage companies climbed in premarket trading on Thursday after Apple Chief Executive Tim Cook warned that soaring memory and storage chip prices could force the iPhone maker to raise product prices.
Micron Technology (MU) rose about 4.7% before the opening bell, while Sandisk gained 4.4%.
Seagate Technology advanced around 4% and Western Digital climbed more than 5%.
The gains came after Cook told The Wall Street Journal that increasing component costs had become difficult for Apple to absorb.
“Unfortunately, price increases are unavoidable,” Cook told the newspaper.
“We’re doing our best to mitigate the huge increases that are being passed to us, and we’ve been trying to shield our customers from the increases, but the situation has become unsustainable.”
Apple grapples with supply constraints
Cook did not specify when price increases could take effect or which Apple products may be affected.
The comments come as Apple prepares to launch a new lineup of devices, reportedly including its first foldable iPhone alongside the iPhone 18 Pro and Pro Max models in September.
The Apple chief executive, who is set to hand over leadership to John Ternus on September 1, said both memory and storage pricing remain key concerns for the company.
“There’s less supply at a time when consumers want devices and the memory guys are passing along huge price increases,” Cook said.
We definitely need memory pricing and supply to return to reasonable levels for consumer products. That's the bottom line.
China has domestic memory and storage manufacturers that could potentially help ease shortages, although US companies generally require government licenses to engage with them because of national security restrictions.
Asked whether such restrictions should be reconsidered, Cook said: “Everything needs to be on the table,” adding, “I think we should look at all supply.”
AI demand reshapes the memory market
Cook’s comments are the latest indication that the artificial intelligence boom is reshaping the semiconductor industry and tightening supplies of memory chips.
AI data centers are consuming growing quantities of memory, particularly high-bandwidth memory used in advanced AI servers, leaving less capacity for products such as smartphones, personal computers, vehicles and gaming consoles.
Industry estimates suggest demand for AI-focused high-bandwidth memory could grow by roughly 30% annually through 2030, prolonging supply shortages across the sector.
The prospect of sustained shortages has triggered a sharp re-rating of memory stocks over the past year.
Micron shares have gained more than 230% this year, while Western Digital has surged about 280%.
Sandisk has jumped more than 610%, and Seagate has advanced over 270%.
The strong performance reflects investor expectations that memory manufacturers will enjoy rising prices and stronger earnings as supply remains constrained.
Analysts see further upside
Brokerages have become increasingly optimistic on the sector.
Deutsche Bank joined a growing number of firms on Wednesday in raising its price target on Micron to $1,500 from $1,000, saying that memory shortages worsened by AI adoption could continue supporting the company’s performance for several years.
The raised PT reflects a 43% upside to Micron’s Wednesday close.
Morgan Stanley analyst Erik Woodring also recently raised his targets on storage companies.
He increased his price target on Seagate to $1,035 from $767 and lifted his target on Western Digital to $650 from $488.
Both stocks have already crossed the hiked PTs. Western Digital closed on Wednesday at $712.13 and Seagate closed at over $1066.
Woodring said hard disk drives are facing their own supply shortage as cloud-computing providers and AI applications require ever-larger storage capacities.
While personal computers no longer rely on hard disk drives as heavily as in the past, data centers continue to be significant consumers of storage hardware.
The rise of AI inferencing is creating an additional source of demand.
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