Memory stocks have tanked, but BofA says the sharp sell-off is overdone

Core Viewpoint - The recent sell-off in memory stocks, particularly Micron, is viewed as overdone by Bank of America analysts, despite the impact of Google's new compression technology on the demand for memory chips [1][2]. Memory Stock Performance - Memory stocks, including Micron, Sandisk, Western Digital, and Seagate Technology, experienced double-digit declines due to concerns over Google's advancements in AI computing efficiency [1]. - The broader chip sector and tech industry were negatively affected, with the Nasdaq Composite entering correction territory [3]. Technological Developments - Google's TurboQuant technology can reduce memory requirements for AI inference by up to six times without sacrificing accuracy, raising fears that this efficiency could eliminate the AI-driven memory shortage that previously benefited memory stocks [2]. Analyst Perspective - Bank of America analysts noted that compression technology is not new, referencing similar updates from Nvidia, and emphasized that the underlying technology of TurboQuant has been previously recognized [4]. - The analysts compared the current sell-off to the DeepSeek panic of 2025, suggesting that unfounded fears could lead to temporary losses [4]. Future Projections - AI spending is projected to exceed $1 trillion by 2030, with Bank of America describing this as a conservative estimate based on capital expenditure intensity [5]. - The influx of capital into AI is seen as a positive indicator for memory stocks, which are considered a top subsector in the chip industry, following AI computing and semiconductor capital equipment [5]. Specific Stock Insights - Micron is highlighted specifically, with analysts acknowledging ongoing margin concerns but noting that the stock is trading at the low end of its historical valuation [6]. - Bank of America's price target for Micron suggests a potential upside of over 35% from current levels [6].