Memory stocks forget TurboQuant and remember how to rally

US memory stocks are forgetting about a negative catalyst and remembering what it’s like to lead major indexes.

Shares of Micron, Western Digital, Sandisk, and Seagate Technology Holdings are soaring in early trading on Monday.

Morgan Stanley reiterated its confidence in hard drive disk sellers on Monday, saying that recent channel checks “point to strengthening demand, elongating visibility, and most importantly, a much stronger pricing outlook.”

Analyst Erik Woodring boosted his price target on Seagate to $582 from $468 and on Western Digital to $380 from $369.

Aside from that, there’s no real news supporting their advance, so this looks to be a case of, “We now return to our regularly scheduled programming,” a world in which memory stocks benefit from a substantial supply/demand imbalance and enjoy ample pricing power thanks to the AI boom.

The group slumped in early March when the US-Israeli attacks on Iran began, as the war sparked an unwind of popular trades, and then sold off again late in the month after Google published details on its TurboQuant algorithm, which could decrease memory intensity in data center environments.

It’s worth noting that after March 25 was when the US stock market, in general, really hit the skids. So after that negative catalyst, the group was getting caught up in a tide of risk-off activity.

Wall Street analysts at Bernstein and Bank of America, among others, suggested the TurboQuant-inspired sell-off in the group was overdone.

“Despite TurboQuant, GOOGL capex still up +100% YoY,” wrote BofA analyst Vivek Arya, who added that Google “has been publishing similar techs over the last 18 months.”

With Monday’s early gains, these stocks (ex Micron) have now recovered all their post-TurboQuant declines.