Over the past year, the soaring prices of memory chips have turned companies like Sandisk (SNDK.US), Micron Technology (MU.US), and Western Digital (WDC.US) into some of the market's hottest stocks. However, this trend has created significant problems for many of their customers.

Consumer hardware manufacturers, from Apple (AAPL.US) to HP (HPQ.US), are under pressure as their need for expensive memory components has become an investment risk—a risk not expected to reverse in the near term. Rob Thummel, a Senior Portfolio Manager at Tortoise Capital, stated, "They are in a tough spot. They essentially have two choices: either accept lower profit margins, which the market will not like, or raise prices to offset the higher memory costs, which could hurt demand."

Tortoise Capital manages $9.1 billion in assets and operates an exchange-traded fund focused on artificial intelligence infrastructure. The surge in memory demand has led to what technology research firm IDC terms an "unprecedented memory chip shortage," which the firm describes as a "crisis" for device makers as supply constraints cause chip prices to skyrocket.

Apple's stock has risen only 8.6% in 2025, marking its worst performance since 2022, and it fell another 4.4% at the start of the year, ranking among the 20 worst-performing stocks in the Nasdaq 100 Index. HP's stock closed Wednesday at its lowest level since November 2020, after declining nearly one-third in 2025 and dropping another 6.8% early in 2026.

Dell Technologies (DELL.US) shares have fallen 28% since hitting a record high in October. Rising memory prices also pose risks for chipmakers supplying semiconductors for smartphones, as evidenced by Mizuho Securities recently downgrading Qualcomm (QCOM.US) and Bank of America downgrading Arm (ARM.US).

Thummel commented, "As long as memory prices remain high—and we expect them to stay elevated for a while due to AI demand—the market will likely continue to pressure them." Among industry players, he is only bullish on Dell, as growth in its server business helps offset the negative impact of rising memory costs.

In contrast, memory device companies have started 2026 strongly, with Sandisk, Western Digital, Micron, and Seagate Technology (STX.US) continuing their gains from 2025. Sandisk leads the S&P 500 Index with a year-to-date surge of over 60%, while Western Digital and Micron are also among the index's top 20 gainers.

Samsung Electronics' recent earnings showed that the average selling price for DRAM chips increased by more than 30% quarter-over-quarter, while NAND chip prices rose about 20%. This price increase trend is expected to persist into 2026 and beyond, also driving Samsung's profits to grow more than threefold.

IDC analyst Francisco Jeronimo wrote in a December report, "For an industry long characterized by boom-and-bust cycles, this time is different. This is not just a cyclical shortage caused by supply-demand mismatch, but a potential permanent strategic reconfiguration of global silicon wafer capacity."

According to Jeronimo, memory costs can account for 10% to 20% of the material costs in consumer-facing hardware like smartphones. Last week, Hedgeye Risk Management stated that its confidence in Apple had "decreased somewhat" as memory concerns grow.

PC manufacturers are expected to be hit even harder. In November, HP provided earnings guidance below expectations, with company executives estimating on an earnings call that expected memory cost increases would reduce its 2026 adjusted earnings per share by 30 cents.

Goldman Sachs analyst Katherine Murphy wrote in a note to clients on Tuesday that HP is "the company in our coverage most exposed to prolonged pressure on PC margins and demand." She anticipates that price increases to offset rising costs for components like memory chips will have a "material impact" on low-end consumer PC purchases in the second half of 2026, an area where HP has a larger market share than Dell.

Data shows that over the past month, the consensus estimate for HP's 2026 net earnings per share has been revised down by 7.1%. Dell has also noted the impact of rising memory prices on its performance, although its outlook has held up relatively better due to strong demand in its server business driven by rapid AI development.

Paul Meeks, Director of Technology Research and Managing Director at Freedom Capital Markets, said, "The magnitude of the increase in memory component costs over the next two years will be so significant that it will impact even a company the size of Apple. The good news is that memory prices are cyclical, but with supply so tight currently, I don't expect a correction anytime soon."