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Memory chips traditionally see booms and busts. Strong demand causes prices to rise, then new supply hits the market and prices fall. Rinse and repeat.
That cycle has been upended, at least for now. Massive demand from the artificial intelligence frenzy has created severe shortages and prolonged price hikes. Top memory makers Micron, Samsung and SK Hynix have seen revenue, profits and stock prices explode.
Is the memory market different this time?
Many analysts and investors are betting that the market has fundamentally changed. In a recent investing presentation, Micron seemed to reflect the sentiment, saying that “the memory industry has been structurally transformed by the proliferation of AI.”
But it’s not likely the AI boom will end memory’s cyclical nature. “The core tenet of cycles is still very much part of the story,” says William Kerwin, an analyst at Morningstar. “The key question for investors is when this cycle peaks and how far it falls thereafter,” Kerwin wrote in a recent Micron research note.
Kerwin says that memory makers still don’t want to overbuild because when you have oversupply, pricing crashes. Companies also don’t want idle capacity at hugely expensive chip plants. “Demand can change on a dime,” he says.
Chipmakers have big expansion plans underway, but new factories take a long time to build, and “no major greenfield additions across the industry are expected to matter before 2028,” according to a recent report by market research firm Omdia.
“Major memory manufacturers have internalized the lessons of previous cycles,” said Soo Kyoum Kim, an analyst at IDC, in a recent article. “They are exercising deliberate capacity discipline” by prioritizing advanced AI products and not rushing to fill every order.
However, this unprecedented upswing will last years. A downturn is expected in 2029, according to Kerwin, when more supply becomes available from major new manufacturing plants.
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Memory chip sales have absolutely skyrocketed
Global memory chip revenue is forecast to hit about $803 billion this year, according to World Semiconductor Trade Statistics. For perspective, that’s about the same as the entire semiconductor market in 2025, which was $796 billion.
This year, memory revenue will nearly double the value of all logic chips, a category that includes chips from Nvidia, Intel, Broadcom, Qualcomm, Apple and many others. Memory chip revenue is a driving force behind overall semiconductor revenue being set to reach an astronomical $1.5 trillion this year and nearly $2 trillion in 2027.
(Image credit: Future)
Micron’s recent third-quarter results highlight the trend. The company saw quarterly revenue explode 346% year-over-year to $41.5 billion. In 2026, revenue will be nearly $140 billion, with sales set to hit $340 billion in 2027, according to a Morningstar forecast. Back in in 2023, the U.S. memory chipmaker had $16 billion in revenue.
Chipmakers still want to avoid a painful crash and will continue to exercise discipline over supply, ready to respond if memory prices sink. Another recent tactic is using long-term contracts to smooth the ups and downs of demand. Micron inked 16 multi-year deals worth $22 billion to start, for example.
Even in a downturn, global memory revenue will remain at a far higher level because of AI demand. Prices will be higher than the pre-AI boom, too. “We’re not making a call that AI demand is going to slow down,” says Kerwin. Rather, the bearish call is that a glut of supply brings prices back down.
This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.