Micron Technology's stock price saw a significant drop on Thursday as investors disagreed on its strategy to expand capital expenditure amid the artificial intelligence boom.
Strong Earnings but Valuation Pressure
The wave of data center investments driven by artificial intelligence has led to a rapid increase in the demand for high-bandwidth memory, enabling Micron to achieve record profit margins and propelling its stock price to rise by 240% cumulatively in 2025, with an additional increase of about 61% in 2026.
The company expects third-quarter revenue to be around $33.5 billion, significantly higher than market expectations, indicating that the AI cycle is still in an expansion phase.
Expansion Strategy Triggers Market Repricing
However, the company announced it would increase its fiscal 2026 capital expenditure to over $25 billion and plans to continue expanding investment in 2027. This expansion plan has raised concerns in the market about the risk of oversupply.
Industry observers noted that memory chips are inherently cyclical, and expanding production too quickly could squeeze future price and profit margins.
Impact on Global Supply Chain
As one of the only three major suppliers of high-bandwidth memory globally, Micron's production expansion decision is significant for industry guidance.
The stock prices of South Korean manufacturers Samsung Electronics and SK Hynix also fell, reflecting market adjustments in expectations for changes in the supply and demand landscape of the entire storage industry.
Shares of American companies Western Digital, Seagate Technology, and others also experienced various degrees of decline.
