Shares of Micron Technology (MU +0.12%) have declined nearly 18% in the past week and nearly 30% from recent highs (as of March 31). Despite the pullback, the stock is still up over 267% in the past year, making it vulnerable to unfavorable news.
Image source: Getty Images.
While some of the decline can be attributed to profit-taking, investor concerns are also shifting toward the sustainability of memory-chip pricing. Those fears have intensified after Micron announced aggressive capital expenditure plans to expand production capacity.
Investor sentiment has also been affected after Alphabet unveiled a new compression technique that could reduce memory requirements for certain artificial intelligence (AI) workloads.
However, this sell-off ignores the company’s strong underlying fundamentals.
AI-driven memory demand outpaces supply
Micron’s fiscal 2026 second-quarter results were stellar, with revenue soaring 196% year over year to $23.9 billion, while earnings per share rose 682% to $12.20. Management expects revenue to climb to about $33.5 billion, plus or minus $750 million, in the third quarter.
Today’s Change
(0.12%) $0.40
Current Price
$322.20
Key Data Points
Market Cap
$363B
Day’s Range
$311.50 – $329.35
52wk Range
$61.54 – $471.34
Volume
1.3M
Avg Vol
39M
Gross Margin
58.54%
Dividend Yield
0.19%
This momentum is driven by rapidly increasing memory requirements to support AI workloads across data centers, PCs, and smartphones. While Alphabet’s breakthrough technology raises concerns that memory requirements for some inference workloads (real-time deployment of AI models) could decline, it does not eliminate the broader need for high-performance memory needed for training and data storage.
Micron said supplies remain so tight that some of its key customers are receiving only about half to two-thirds of their medium-term demand. This imbalance is driven by limited capacity, long lead times required to build and ramp up new fabrication centers, the higher amount of silicon required to manufacture high-bandwidth memory (HBM), and diminishing efficiency gains from advanced manufacturing nodes. The company also expects the tight supply-and-demand conditions to persist through 2026, which would support high memory prices.
Management is also increasingly adopting multiyear strategic customer agreements to lock in volumes and reduce revenue volatility.
With the recent pullback reflecting short-term concerns rather than weakening fundamentals, this may be a smart entry point for long-term investors to take a small stake in Micron.
Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Micron Technology. The Motley Fool has a disclosure policy.
