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SanDisk Corp. SNDK and Micron Technology Inc. MU have gone from Wall Street’s biggest AI winners to some of its hardest-hit stocks over the past few weeks.
But BlackRock says investors may be drawing the wrong conclusion.
The world’s largest asset manager argued Monday that the sharp selloff across technology and semiconductor stocks “is overstated,” warning that markets are confusing a shift in AI competition with a collapse in AI investment.
The distinction could matter for investors trying to decide whether the recent correction represents the end of the AI trade or simply another buying opportunity.
The Market Thinks Cheaper AI Means Lower Chip Demand
The iShares PHLX SOX Semiconductor Sector Index Fund SOXX has fell 15% from June highs and briefly entered bear-market territory as investors worried that lower-cost Chinese large language models could undermine the economics of expensive frontier AI models.
If AI becomes dramatically cheaper to build, the reasoning goes, hyperscalers may eventually need fewer cutting-edge chips.
BlackRock believes that logic misses the bigger picture.
“Tech and semiconductor stocks sold off sharply last week. We see these moves as overstated: cheaper AI changes the winners, not the investment case,” the world’s biggest asset management said in its latest weekly market commentary.
Instead of reducing AI spending, cheaper models could accelerate adoption across more industries, increasing demand for the infrastructure required to deploy artificial intelligence at scale.
More AI Users Still Mean More Infrastructure
BlackRock indicates that lower AI costs expand the addressable market.
As more companies integrate AI into products and workflows, demand still rises for data centers, networking equipment, memory chips and power infrastructure.
The firm said investors are overlooking “the other side of the story: cheaper AI could broaden adoption and reinforce demand for AI infrastructure.”
That thesis closely matches one of Wall Street’s biggest structural investment themes this year.
Earlier this year, AI capital spending rotated beyond graphics processors into memory, optical networking, power equipment and liquid cooling as hyperscalers continued expanding AI infrastructure.
Earnings, Not Geopolitics, Remain the Bigger Driver
Despite renewed Middle East tensions, BlackRock says resilient economic growth and continued earnings expansion keep it overweight U.S. equities.
The firm indicates corporate earnings are still growing faster than the rising cost of capital, noting consensus now expects S&P 500 earnings growth of roughly 25% in 2026, up from 18% only three months ago.
Its conviction around AI infrastructure also remains unchanged.
Among its highest-conviction portfolio themes, BlackRock continues to recommend overweight exposure to U.S. equities with a focus on AI bottlenecks including power, chips and data centers.
How High Do Analysts Think SanDisk and Micron Can Go?
According to Benzinga Analyst Ratings, the consensus rating on SanDisk is Outperform.
The stock has run so hard that its blended average target of $1,418.14, drawn from 22 analysts, now sits below its own share price near $1,608.
The freshest calls tell the real story. The last three notes average $2,666.67, and targets stretch to a Street-high $3,250 from Susquehanna.
Micron tells a cleaner version of the same story.
Analyst consensus sits at a Buy, with an average target of $1,316.79 from 29 analysts — roughly 36% above the recent price near $969.
Here too the newest actions were more aggressive, averaging $1,750, or about 81% upside, with a Street-high $2,000 shared by Cantor Fitzgerald and Barclays. Goldman Sachs is the lone cautious voice, holding a Neutral rating at $1,100.
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This article Time to Buy SanDisk, Micron? BlackRock Says Chip Stock Rout Is Overdone originally appeared on Benzinga.com.
