The Tim Cook Effect: Apple CEO's Forecast Triggers a Rally in Memory Manufacturers' Stocks

Shares of memory manufacturers for mobile devices and PCs soared after Apple CEO Tim Cook acknowledged that price increases for the company’s devices were inevitable due to a shortage of memory chips. His statement served as confirmation for investors: demand for memory is outpacing supply to such an extent that even the largest players can no longer offset rising costs.

At the close of trading on Thursday, June 18, shares of manufacturers of dynamic random-access memory (DRAM), flash memory (NAND), and HBM memory for AI chips rose sharply. Shares of South Korea’s SK Hynix and Samsung Electronics rose 6.5% and 4.6%, respectively, while shares of U.S.-based Micron Technology gained 8.7%. Shares of SanDisk, which manufactures flash memory, jumped 11.5%, while those of data storage manufacturer Western Digital rose 4.8%. The Roundhill Memory ETF, which tracks these companies, rose 9.7%.

In an interview with The Wall Street Journal, Apple CEO Tim Cook stated that price increases for the company’s devices are “inevitable” due to the current shortage of memory chips in the market, which has driven up their prices. “We are doing everything we can to mitigate the massive cost increases that [memory manufacturers] are passing on to us, and we have tried to protect our customers from price hikes, but the situation has become unsustainable,” he said.

Cook's warning underscores that demand for memory chips will continue to outstrip supply, according to Business Insider.

A memory crisis, triggered by rising demand for these chips from AI companies, has brought their manufacturers into the spotlight on Wall Street. Since supply cannot keep up with demand, both retail and institutional investors have rushed to jump on this overheated trend, the publication notes. Against this backdrop, U.S. companies Micron and SanDisk hit new record highs, while the market capitalization of South Korean chipmakers Samsung and SK Hynix exceeded $1 trillion for the first time. The Roundhill Memory ETF has already risen 184% since the fund’s launch on April 2.

The price increase for Apple devices will come at a critical moment, notes Dan Ives, senior technology equity analyst at Wedbush Securities. He predicts that consumers may face higher prices in September, when the new iPhone 18 lineup is unveiled. “Amid the rapid rise in DRAM and NAND flash memory prices—with no end in sight—Apple has already raised these issues during its recent earnings conference calls. The rise in prices for these components has been offset by previously built-up inventory, which has supported gross margins in recent quarters,” Business Insider quotes Ives as saying.

The bet on memory manufacturers still looks strong, noted Gene Munster, managing partner at Deepwater Asset Management, commenting on Cook’s remarks. “Talk of price increases is definitely pushing the stock higher. The very fact that Tim Cook is forced to raise prices is a sign of just how serious the problem has become,” Munster said on CNBC.

Apple may be just the first among device manufacturers to have to raise prices to offset the sharp rise in memory costs, noted Chris Versace, senior portfolio manager at TheStreetPro. “We’ve already seen companies forecasting a decline in shipments of smartphones, PCs, and other consumer electronics. But depending on which devices are affected by the price increases and how much they go up, further downward revisions to expectations are possible,” Business Insider quotes Versace as saying.

This article was AI-translated and verified by a human editor