Cathie Wood Says the Memory Chip Trend Is Up but the Cycles Are ‘Vicious’

7,748.20+0.29%Dow Jones52,231.50+1.16%Nasdaq 10029,906.60−0.15%Russell 20002,769.89+1.42% S&P 5007,748.20+0.29%Dow Jones52,231.50+1.16%Nasdaq 10029,906.60−0.15%Russell 20002,769.89+1.42% S&P 5007,748.20+0.29%Dow Jones52,231.50+1.16%Nasdaq 10029,906.60−0.15%Russell 20002,769.89+1.42% S&P 5007,748.20+0.29%Dow Jones52,231.50+1.16%Nasdaq 10029,906.60−0.15%Russell 20002,769.89+1.42% S&P 5007,748.20+0.29%Dow Jones52,231.50+1.16%Nasdaq 10029,906.60−0.15%Russell 20002,769.89+1.42% S&P 5007,748.20+0.29%Dow Jones52,231.50+1.16%Nasdaq 10029,906.60−0.15%Russell 20002,769.89+1.42% Investing Cathie Wood Says the Memory Chip Trend Is Up but the Cycles Are ‘Vicious’ Cathie Wood is steering ARK away from memory chips just as Micron and SanDisk post some of the fastest margin expansions in their histories, and her reasoning about Chinese rivals may explain why those gains look fragile.

ARK Invest founder and CEO Cathie Wood told investors in Hong Kong on October 13 that her firm stears clear of conventional memory chip makers. That stance runs straight into two of the past year’s biggest winners: Micron Technology (NASDAQ:MU | MU Price Prediction) and SanDisk (NASDAQ:SNDK).

“The trend is up, but the cycles are vicious,” Wood said, according to a Quartz summary of Bloomberg’s report. She added that if “you get a few more incremental competitors, especially out of China, the volatility will increase.”

Shares of Micron trade at $906.16, down 0.87% today and 16.7% over the past week. Despite that drop, the stock is up 217.74% year to date and 384.99% over one year. SanDisk shows the same pattern on a larger scale: shares sit at $1,355.55, off 19.9% in a week yet up 964.93% over a year. Today’s headlines describe a deepening AI stock sell-off, so Wood’s warning landed while the stocks were already drop.

The companies’ own margins illustrate her point. Micron’s fiscal Q4 2026 non-GAAP gross margin hit 87.0%, compared with 45.7% a year earlier. SanDisk’s GAAP gross margin rose from a 22.5% low in fiscal Q3 2025 to 84.6% in fiscal Q4 2026. Margins that expand that fast on pricing can contract just as fast when supply catches up.

Wood named state-backed CXMT as a source of supply pressure. ChangXin Memory Technologies has disclosed progress. The progress is on a more compact DRAM cell design and plans to introduce server-grade DDR5 products before the end of 2026. Micron stock dropped on October 12 as that news spread.

CXMT has yet to show large-scale output of the new architecture. Turning a design win into commercial volume requires solid yields, qualification at demanding server customers, and new fab capacity. Micron cited long clean-room lead times and slow fab increases as reasons it expects the industry to stay supply constrained in calendar 2027 and calendar 2028. “We do not have line of sight to when supply and demand will return to balance,” the company said.

The company has signed 26 strategic customer agreements expected to represent over 35% of revenue through 2030, backed by $32 billion in customer commitments, mostly cash deposits. Micron’s Mark Murphy said, “Even at floor prices, we expect margins meaningfully above any prior cycle peak margins.” Still, a quarter of that agreement revenue gets priced periodically at market rates.

SanDisk’s New Business Model agreements should cover more than 50% of bits in fiscal 2027 and approximately two-thirds in fiscal 2028. They are backed by $16.5 billion in financial guarantees. “A year ago, we were talking about visibility in this business of three months. And now we’re talking over four years of committed financials,” management said. Pricing on the remaining business “will fluctuate with the market,” and consumer revenue fell 32% quarter over quarter as higher prices weighed on demand.

Wood expects Chinese supply to sharpen the swings. Micron and SanDisk are counting on multi-year contracts with price floors to absorb them. Riding a cycle like this one works as long as you plan the exit, which is the whole subject of our free bubble survivor’s handbook. The next two quarterly reports will show which force carries more weight.

Contact [email protected] for any questions or corrections.

Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.

His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.

When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.

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