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One headline out of China just wiped out about a hundred and eight billion in the market capitalization of three companies before noon. It wasn't a bad financial report. The Chinese company announced progress in chip development. And Micron, SK Hynix, and SanDisk were bleeding all morning. Here's what should alert you.
SanDisk doesn't even make these chips. So stay with me, because by the end of the video you'll understand where the panic is , where the reality is, and what exactly I look at before touching these stocks. Today in our video we will look at six stocks. Number one, SanDisk, down nearly six and a half percent.
Number two, Micron, down 4 %. Next comes SK Hynix, another minus 4%. AMD, down almost two and a half. Western Digital, two and a half. Seagate, minus almost three and a half. And each of them is " red" today. All stocks of semiconductor companies. And SanDisk alone fell by a hundred dollars per share.
If this video helped you, please give it a like—it takes two seconds, and subscribing means you won't miss tomorrow's continuation of our daily videos. Which is important, because the story is not over yet. So what really happened this morning? A company called Changxin Memory Technologies, or what we know as CXMT.
Remember how it started with a 400% return on the first day of listing on the stock exchange? So, CXMT is abbreviated, it is Chinese. It is not listed in the United States. And over the weekend it announced that it had made progress in developing a denser memory cell. The same type of design that Samsung and SK Hynix are working on.
It plans to release server memory modules based on it by the end of this year, which is very important. And later this year, a product for data centers with artificial intelligence. This is what scared investors. Why is this important? Because the entire memory trade is based on one idea. Supply is limited, so prices remain high .
A stronger Chinese competitor puts this idea at risk. By Monday morning, Micron had lost about $52 billion in market value. SK Hynix— about 41 billion, and SanDisk—about 15 billion. That's $108 billion. Samsung and SK Hynix both fell 4% in the market in Seoul, South Korea . But progress in design is not the same as shipping millions of chips.
So did the market simply sell the promise? That's what confuses people. SanDisk manufactures NAND flash memory. Seagate and Western Digital manufacture hard drives. None of them manufacture DRAM. So why did they all fall? Because the market trades them as one basket. Foundations hold them together. So the scary headline drags the whole group down.
The memory ETF has risen about 106% over the past year. So, when stocks are rising so rapidly, every headline becomes an excuse to take profits. If you look at the rest of the market, the S&P 500 has essentially stayed the same . The Dow rose, while the Nasdaq 100 fell about half a percent. This is a rotation of leaders, not a market crash.
And oil is adding to the pressure, with Brent trading around $103 on concerns about the Strait of Hormuz. So if demand is still strong, why is everyone acting like it's not? Four days before the sell-off, Samsung told the world that its third-quarter operating profit had reached 107 trillion won. This is the first time any South Korean company has surpassed the 100 trillion won mark in a single quarter.
We are talking about South Korean won. Which is 782% more than a year ago. SanDisk's revenue last quarter was $8.96 billion, up nearly $370 billion from a year ago. With adjusted earnings of $40 per share versus the expected $33.28. Management said customer demand is growing faster than supply and expects NAND output to remain limited after 2027.
So, no one reports weakness. They report on records. The fear is what will happen in 2027 if supply increases. Before we go any further, I wanted to tell you something . Every day, I share my own portfolio transactions, buys, sells, watchlist, and market commentary in our Bear Finance community. So if you want to join us, click the "Join" button below on YouTube, or you can join me directly on Finance with Beara for daily posts.
And higher-level participants even get a full portfolio review with me. And to be clear: none of this is a recommendation to buy or sell. This is just what I do with my own portfolio. And remember, the first month on YouTube is free. So, let's move on to the video. Which of these six stocks will lose the most if this fear about the offer becomes a reality?
Let's start with two that were already losing ground: Seagate and Western Digital. They have fallen by almost 19% and 16% since October 1. And news about the memory market is irrelevant here. On October 2, Toshiba, the smallest of the three hard drive manufacturers, announced plans to double capacity, aiming to capture 30% of the market over time.
On the same day, Seagate fell 10% and Western Digital fell 7%. So why is it harmful? Because both CEOs linked their pricing policies to limited supply. An increase in supply from Toshiba threatens this. Bernstein argues that the panic was exaggerated. And Seagate said back in April that their data center drives were almost completely sold out by 2027 , which is great news .
On Monday, Seagate closed at 7.55, and Western Digital at 3.86, which is relevant today. The next tests are very close. Western Digital reports on October 22 after the close of trading, forecasting revenue of 4 billion. Therefore, a report from Seagate is expected around October 28th. This is where most people get it wrong.
Good results do not guarantee stock growth. So what happens if results beat expectations again and the stock still falls? We have already observed this during recent reports. SanDisk fell 6.5% to $1,470, the worst performer in the group, and it doesn't even make DRAM. After Monday, the stock is still up about 480% this year, which is why it has the most downside potential.
The arguments in favor of growth are quite simple. Demand for NAND is outpacing supply. Production volumes are scheduled under contracts until 2027. Next quarter's revenue is forecast to be between 10.3 and 10.8 billion. The company also has $15.5 billion to repurchase shares, and Bank of America has a buy rating with a $2,500 price target.
The arguments in favor of falling are just as simple. The memory and storage market is traded as a single complex, so SanDisk is dragged down even when the news does not concern its products. And even if Chinese capacity reaches the level of NAND, not just DRAM, the pricing situation will change. Here's what you're probably assuming.
That the stocks that have fallen the most are in the greatest danger . Given this news, they may be the least vulnerable. So, is SanDisk the market's biggest overreaction or its loudest warning? Now let's move on to Micron and SK Hynix, as these two are actually on the CXMT path because they manufacture DRAM.
Micron fell nearly 4% to $988, and closed at $1,029 on Friday . That's about 16% below its June record, and the stock has fallen below the low set on Oct. 7. SK Hynix is a South Korean company, and its US shares fell almost 4% to $162. It is a leader in high-bandwidth memory —the stacked chips that power Nvidia's AI processors.
Optimists argue that such stacks are much harder to copy than a standard memory cell. So, the threat is smaller than the headlines suggest. The argument in favor of a drop is that if CXMT does indeed ship server modules by the end of the year, prices for standard server memory could drop faster than anyone expects.
So, are Micron and SK Hynix victims in this situation, or are they best protected? This brings us to AMD, because AMD is an exception because it doesn't manufacture memory at all . It fell by about 2.7% to $590 without any news about the company itself. It is now 6.7% below its October 2 close at $633.
Why is that? Because memory and NAND chips depend on one story— AI spending. And when one part of this story falters, another part also falls in value. The bullish scenario for AMD is simple: the third- quarter revenue forecast is $13 billion, up about 41% from last year. Last quarter, the company beat earnings expectations, earning $1.44 versus the $1.35 the market had expected.
The launch of the MI450 is expected in the second half of this year. The bear scenario is quite simple. A lot depends on OpenAI. Earlier this year, a Wall Street Journal report noted that OpenAI had missed some of its revenue and user goals. The next test is November 3 after the close of trading. So , if AI spending slows, which stock in your portfolio will be hit first?
This brings us to the bullish and bearish scenarios for these stocks. So, let's put it all together. The bullish scenario consists of three parts. First, the demand is real , as evidenced by the record figures of Samsung and SanDisk. And deliveries are scheduled until 2027. Second, the new CXMT design is an update, and products are not expected until the end of this year.
Third, this group had sharp declines before recovering, including a sharp sell-off in July, followed by a sharp rebound in August. The bear scenario also has three parts. First, it is pricing power. So, if the Chinese supplier and Toshiba increase volumes simultaneously, the story of limited supply will weaken.
Secondly , it is a cost estimate. After a roughly 480% rise in SanDisk and a 106% rise in the sector ETF, the market has no patience for bad headlines. Third, the cost of AI. If funding for AI data centers falters even slightly, every stock on this list will feel it. Both options can be correct at the same time, but that doesn't mean the trade is broken.
This means that the easy phase is over and now every headline affects the price. So, what should we actually do ? This brings us to my final verdict. Here is the structure I would use, and this is just a tutorial, not a recommendation. First, ask yourself what part of your thesis has changed. A news headline is not a collapse of a thesis.
Second, know what you own. Micron and SK Hynix bear the CXMT risks, while SanDisk bears the NAND risks. Western Digital and Seagate bear Toshiba's risks, while AMD bears EA's cost risks . Third: calculate the position size so that a 6% drop in a day does not force you to sell. So, if SanDisk shares dropping $100 in a session makes you nauseous , your position is too big.
Fourth: use a calendar. Western Digital reports on October 22, Seagate around October 28, and AMD on November 3. And this is how I look at it. This is like a stress test, not a final verdict. The fear is real , but the losses to real profits are not yet visible. However, after such rapid growth, any crack provokes a quick sale, so you need to consider the risks.
And a huge thank you to every Bear Finance member who supports this channel, including our members during these difficult times. Thanks for your support, and I'll see you in my video tomorrow.
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