Memory stocks sank early Thursday, the latest development in what’s been an interesting week for the AI trade.
Bloomberg attributed a sell-off in memory names like SK Hynix, Micron (MU), SanDisk (SNDK), and Western Digital (WDC) to research published by Google earlier this week that appeared to lower demand requirements for AI models.
Google researchers unveiled a tool called TurboQuant, “a compression algorithm that optimally addresses the challenge of memory overhead in vector quantization.”
When you interact with an LLM, part of that response — in some cases, most or all of it — is coming from a memory cache that houses previous interactions with the model. In other words, every interaction with an LLM does not start from zero.
TurboQuant is aimed at lowering the memory intensity of storing these responses. A shortage of memory chips has been one of the key bottlenecks in AI development flagged by the industry over the last few months.
Thursday’s decline in memory stocks also cools off one of the hottest AI trades this year and is the latest pocket of stock market weakness tagged to new technological advances in AI.
Software stocks have also continued their sell-off this week, with this decline attributed both to new agentic tools released by Amazon and advances from Anthropic that will allow Claude to complete a wider range of tasks on a user’s computer.