Memory chip shares are experiencing a sharp resurgence following a brutal sell-off in July, with SanDisk leading the charge.

According to reports from the Wall Street Journal, US Commerce Secretary Howard Lutnick stated that the Trump administration opposes Apple's plans to purchase chips from Chinese memory manufacturers. This news has boosted sentiment among US memory-related companies.

After the dramatic plunge in July, SanDisk shares have now posted consecutive gains. Over the five trading days of last week, SanDisk's stock price climbed 35%, and in the most recent full trading day (August 17), it continued its upward momentum with an additional 8.9% gain. However, despite this recovery, the current share price remains approximately 30% below its all-time high of $2335, which was reached on June 25.

Other memory manufacturers also saw their shares rise on the 17th. Western Digital climbed 5.4%, Seagate Technology rose 2.2%, and Micron Technology gained 4.1%.

Where the rally finds its footing

Beyond the political headlines, several other factors are driving SanDisk's recovery. During its investor day last week, the company unveiled ambitious long-term plans, projecting revenue compound annual growth in the mid-to-high teens percentage range for fiscal years 2028 through 2030, while forecasting gross margins to stabilize around 80% during the same period. This outlook quickly dispelled market concerns that the memory industry cycle might be reaching its peak.

Analysts are also turning increasingly bullish on the stock. JPMorgan resumed its optimistic coverage of SanDisk last week, issuing an "overweight" rating with a price target of $2250. Analyst Harlan Sur noted that the company holds a "unique position" to capitalize on the structural inflection point in NAND flash demand, driven by the rapid growth of AI inference workloads.

Wedbush Securities analyst Matt Bryson reaffirmed his "outperform" rating and $2000 price target. He also pointed out that Wedbush's current earnings projections may underestimate SanDisk's profit potential for 2028, especially given the company's plans for substantial stock buybacks in the coming years.

Currently, the average price target for the stock stands at $2210, with 80% of analysts giving it a buy rating—the highest proportion since SanDisk was spun off from Western Digital last year.

The Philadelphia Semiconductor Index has also entered bull market territory, rising 1.6% to close at 12,621 points on the 17th. According to Dow Jones Market Data, the index had been in bear market territory for 21 days, marking the shortest such period since March 2020.

A catalyst from the AI front

Adding to the positive sentiment, Anthropic's second-quarter revenue growth, which is projected to increase more than fourteen-fold year-over-year, also fueled optimism for memory and storage-related companies on the 17th. The earnings report shows Anthropic's Q2 revenue exceeded $11.5 billion, compared to $787 million in the same period last year. Mizuho analyst Jordan Klein commented that "the positive earnings reports from Anthropic and OpenAI" are the primary near-term catalysts for chip stocks, as the two rivals prepare for their respective initial public offerings.

Market consensus estimates place Anthropic's full-year revenue for this year between $75 billion and $100 billion, with projections suggesting that figure could reach $180 billion to $200 billion by the end of next year. Klein believes this will translate into substantial spending on "AI chips, memory components, networking, and other data center hardware."

Bank of America analyst Vivek Arya wrote in a client note that SanDisk's investor day "indicates the industry may be entering a more durable phase." Arya said that SanDisk's outlook for "15% annual sales growth and gross margins staying above 80% through the end of the decade" provides investors with a long-term evaluation framework, adding that those numbers are indeed "supported by its new customer agreements and supply strategy."

However, Friedman offered a note of caution, saying he would be "careful about chasing the rally" given that the sector's stocks had already fallen 30% to 40% in July.