The storage sector's big drop, how many people did it scare?

Last night, the U.S. stock market storage sector plunged sharply, with SanDisk falling over 14%, Micron dropping nearly 5%, and Western Digital declining over 9%. Many people were terrified and asked if the underlying logic had changed.

Don't panic, let's break it down.

First, look at the broader market.

Last night, the Dow Jones Industrial Average hit a record high intraday, with Apple rising over 4.8% and Microsoft gaining over 1.6%. The broader market is fine, and the tech giants are fine. If there were economic problems, it wouldn't be possible for only the storage sector to fall while everything else rises. This indicates it's not a fundamental collapse, but a specific issue within the storage sector itself.

Second, look at the capital.

Storage stocks have risen too much this year—Micron is up over 241% year-to-date, and SanDisk is up over 635%. A massive amount of profit-taking positions has accumulated, mixed with a large volume of leveraged funds. When the stock price fell, leveraged funds were forced to liquidate, creating a stampede. This isn't a breakdown in logic; it's a normal correction after a significant rally.

Third, look at a small detail—DeepSeek's peak and off-peak pricing.

Perhaps few people noticed: DeepSeek introduced a peak and off-peak pricing mechanism when the V4 official version launched, doubling the API call price during peak hours. Why the price increase? Because computing power is insufficient, and they need to use pricing to shift non-urgent demand to off-peak hours.

An AI company still at the table says it doesn't have enough computing power. Meanwhile, Meta, which has left the table, says there's a surplus of computing power and wants to sell it externally. Whoever is at the table calls the shots—this principle isn't hard to understand, right?

The fundamentals of the storage sector haven't changed at all—HBM production capacity is booked until 2027, and long-term agreements have locked in prices and volumes. What fell is sentiment, not logic.

Finally, regarding operations:

Those who want to bottom-fish can start buying some. Light or heavy positions are fine, but absolutely no leverage. Leverage is a death sentence during volatile periods—I've said this many times.

The stock market is unpredictable in the short term, but the two main narratives currently—the interest rate hike story and AI commercialization—pose no threat to the long-term upward logic of the stock market. Volatility is the norm; get used to it.

I encourage adding to positions, but the premise is: use idle money, don't add leverage, and be able to sleep at night.

$Sandisk(SNDK.US) $Microsoft(MSFT.US)