Key Takeaways
- Memory chip stocks including Micron and Sandisk experienced significant declines following Google’s announcement of TurboQuant, an algorithm that reduces AI memory requirements by 6x or more
- Market participants grew concerned that reduced memory consumption per AI model would translate to decreased chip demand, driving both stocks down more than 15% from their recent peaks
- Vijay Rakesh from Mizuho Securities maintains his bullish stance, reaffirming Outperform ratings for both companies
- The analyst contends that efficiency gains like TurboQuant typically drive greater AI adoption overall, ultimately increasing memory demand—a phenomenon economists call Jevons’ Paradox
- NAND content in AI servers has expanded twofold over the last twelve months, while spot market prices continue their quarterly ascent
Shares of memory chip manufacturers Micron and Sandisk took a beating in recent trading sessions after Google disclosed technical specifications for TurboQuant, a novel compression technology that reduces the memory requirements of artificial intelligence models by a factor of six or more. The innovation simultaneously delivers inference speed improvements of up to eight times while maintaining model precision.
Investors interpreted the development negatively for semiconductor companies specializing in memory products. The logic seemed straightforward: if each AI application requires less memory, manufacturers like Micron and Sandisk would see reduced chip sales.
The two stocks have shed at least 15% of their value from the record highs they achieved in late last month. Thursday’s trading session saw Sandisk shares decline 5.9% to $652, with Micron falling 5.5% to reach $347.78.
Market sentiment took an additional hit when President Trump’s Wednesday evening remarks failed to provide clarity on when the Iran conflict might conclude, adding to investor apprehension during Thursday’s trading.
Google researchers initially investigated TurboQuant in 2025, with updated findings on AI inference capabilities published in subsequent reports.
Mizuho’s Case Against the Market Reaction
Vijay Rakesh, an analyst covering the semiconductor sector for Mizuho Securities, challenged the market’s negative assessment in a client communication. He maintained his Outperform recommendations for both Micron and Sandisk while preserving price objectives of $530 and $710 respectively.
In his note, Rakesh advised clients to “buy the TurboQuant memory pullback,” characterizing concerns about reaching peak memory demand as “overblown.”
The foundation of his thesis rests on historical precedent: AI efficiency breakthroughs typically stimulate increased investment rather than reduced spending. This counterintuitive outcome reflects Jevons’ Paradox—an economic principle stating that making a resource more efficient or affordable often increases its total consumption instead of decreasing it.
Rakesh highlighted three historical parallels. Server virtualization technology was anticipated to diminish server purchases but actually expanded the market. When DeepSeek emerged in 2025, analysts predicted reduced GPU requirements, yet AI infrastructure investments accelerated. Similarly, the transition from copper to optical networking delivered 10x bandwidth gains and was expected to reduce expenses, but instead prompted higher capital spending on AI server infrastructure.
Robust NAND Market Fundamentals Persist
According to Rakesh’s analysis, NAND memory capacity in AI servers has experienced a 100% increase during the past year. Meanwhile, spot market quotations have maintained their upward trajectory each quarter.
The analyst projected that compression technologies like TurboQuant would “enable larger large-language models, faster inference and better tokenomics, spurring more spending” throughout the AI ecosystem.
Given the combination of rising prices and solid fundamental demand, Mizuho anticipates that both Micron and Sandisk may exceed current consensus earnings projections in coming quarters.
Sandisk shares currently change hands around $652, representing a discount to Mizuho’s $710 valuation. Micron trades near $347, compared to the firm’s $530 price objective.
