Nasdaq posts worst week since June as memory stocks tumble. SpaceX, Tesla, and Meta report next week.

Memory and storage stocks fell sharply this week as the Nasdaq Composite posted its worst weekly decline since late June. Micron Technology (MU) lost 14.6%, Western Digital (WDC) fell 16.4%, and SanDisk (SNDK) dropped 17.9%. The Nasdaq finished down 4.48% at 26,140.03.

The losses were heavier in tech. The S&P 500 fell 1.95%, while the Dow Jones Industrial Average gained 0.67%. Investors weighed a planned Chinese memory product, hotter-than-expected inflation, and rising oil prices. Elon Musk also weighed in on memory pricing and future Chinese supply.

CXMT put future memory supply in focus

On Oct. 10, Chinese memory maker CXMT said it expects to launch server memory around year-end using a smaller DRAM cell design called 4F². The design could fit more memory cells into the same area than today's common 6F² layout. But CXMT disclosed neither product specifications nor expected shipment volumes, as we reported on Monday.

Micron fell 3.9% to $989.04 on Monday, the first trading day after the announcement. Korean chipmakers also suffered heavy losses during the week. On Thursday, SK Hynix dropped 11.06% as the Kospi fell 7.57%. The iShares Semiconductor ETF (SOXX) ended the week down 11.8%.

On Oct. 13, Musk praised Micron's pricing. "Micron has been reasonable regarding future memory prices, while others have been extortionate, which is something today's customers won't forget," he wrote on X.

Elon Musk on X

Two days later, he responded to a post summarizing a South Korean column that warned new capacity could bring a memory oversupply in 2029. "China will be making a LOT of RAM in 2028," Musk wrote.

Elon Musk on X

I read that as a warning about future supply. More Chinese production could put pressure on prices, but whether it ends the shortage depends on how quickly demand grows. Musk didn't say when the shortage would end.

Micron rose 1.9% the day of that post, then fell 5.6% on Friday to close at $878.84.

Inflation, oil, and CoreWeave added pressure

Consumer prices rose 3.7% in September from a year earlier, above the 3.6% economists expected, and the odds of an Oct. 28 rate hike jumped after the release on Wednesday. The Nasdaq fell 1.88% that day.

The Nasdaq lost another 2.14% on Friday. Brent crude touched $110 a barrel for the first time since May as Iran escalated attacks in the Strait of Hormuz, and it settled at $109.69.

CoreWeave (CRWV) fell 11.9% on Friday to $61.39 amid concerns about the AI cloud provider's debt. Cathie Wood's ARK Invest had bought 188,665 shares on Oct. 14, the day the stock fell 15.5%, and another 192,566 on Oct. 15. Friday's drop put the stock below both days' closing prices.

The shortage looks intact, but the risk is further out

For memory makers, near-term supply still looks tight. They're adding capacity, but a new factory takes three to five years to come online, and many analysts don't expect the shortage to ease until 2028, according to CNBC. Analysts also doubted that CXMT can change that quickly. "We don't think this is going to swing the supply-demand equation at all," said Kevin Cassidy, a senior research analyst at Rosenblatt Securities.

The risk sits in 2028 and 2029. Counterpoint Research expects DRAM prices to fall about 23% in 2028 from 2027, which would still leave them about 230% above 2025 levels. The Maeil Business Newspaper column Musk responded to cited a Seoul National University professor and a Korea Semiconductor Industry Association executive who expect a "flood of new supply" in 2029.

Micron's valuation suggests investors are already looking past the shortage to the next downturn. At Friday's close, Micron traded at about 4.2 times analysts' average earnings estimate for its fiscal year ending in August 2028. Investors aren't paying for those profits as if they'll last, and to me that's the risk of a 2029 oversupply getting priced in already.

Bank of America analyst Vivek Arya argued on Friday that Nvidia (NVDA), Broadcom (AVGO), and Micron already trade like Cisco after the dot-com crash. "Investors are paying post-crash multiples for a cycle that hasn't crashed," he wrote.

We added a historical comparison using Cisco's own filings. The table divides each stock price by earnings for the fiscal year in progress and for the next fiscal year. Cisco's multiples use the diluted earnings it later reported for fiscal 2000 through 2003 and fiscal 2004. Today's multiples use analysts' average estimates from Yahoo Finance. That makes this a comparison with hindsight, rather than a reconstruction of how investors valued Cisco at the time.

On next year's estimates, Nvidia trades about where Cisco did at its low, and Broadcom a little above it. Both sit inside the 10 to 20 times range Arya cited for Cisco after the bubble burst. On this year's numbers, both trade well above where Cisco bottomed. Micron sits far below everything on the table.

The comparison has a catch. Cisco's earnings are known; today's forecasts can still be cut. If memory prices fall further than analysts expect, Micron's earnings could disappoint, making that 4.2 multiple look less attractive.

I'll be honest. After a drop like this, I think the value is there. I haven't seen enough this week to change my near-term view of memory demand. Next week, I'll be watching Lam Research for signs of continued capacity spending and Western Digital for storage demand and pricing.

What to watch next week

Six companies on our earnings calendar report next week that touch this week's selloff. The right column shows the options-implied move, the size of the swing the options market is pricing in either direction, not a forecast of which way. Each figure is the cost of an at-the-money straddle as a share of the stock price at Friday's 4 p.m. close, using options that expire Oct. 21 for SpaceX and Oct. 23 for the others. These figures cover moves through each contract's expiration, not just the earnings announcement.

Western Digital is the report I'm watching most after its 16.4% slide this week.

After that, the Federal Reserve announces its rate decision on Oct. 28.