Micron Technology Inc.’s post-results selloff has reminded global investors of the inherent risks in betting on artificial intelligence chipmakers. Just days after leading AI chipmaker Nvidia Corp. experienced a staggering loss of nearly half a trillion dollars in market value, Micron shares fell about 8% in extended trading. The memory maker’s forecast did not meet the highest estimates, triggering the selloff.
Micron is among the companies that have benefited from the enthusiasm surrounding AI-related stocks. Its high-bandwidth memory is considered a strong candidate for use alongside Nvidia’s industry-leading chips for training large language models. Over the past year, Micron’s shares had more than doubled, yet the market’s elevated expectations led to punishment for the company when it didn’t surpass these lofty forecasts.
“The market is holding totally unrealistic expectations, as many names who are beating street estimates by a wide margin are still being sold down,” said Andrew Jackson, head of Japan equity strategy at Ortus Advisors Pte in Singapore. “But I think the street is very well aware of the fact that these US names are pretty overcooked. Too many paper hands chasing the fast easy money.”
The significant market value increases appear vulnerable to rapid corrections, as evidenced by Nvidia’s recent volatility. Earlier this week, Nvidia shares entered correction territory on Monday before rebounding. A global gauge tracking semiconductor shares has fallen about 5% since reaching an all-time high earlier this month. Taiwan Semiconductor Manufacturing Co., which produces Nvidia’s most valuable chips and is critical for AI, has slipped more than 2% since its June 19 high.
Micron’s news also impacted South Korea’s two biggest memory makers, Samsung Electronics Co. and SK Hynix Inc. Their shares initially dropped but recovered by the close on Thursday. For these companies, which are still recovering from a slump in their traditional outputs of supplying memory for PCs, smartphones, and conventional data centers, this signals a greater degree of share price uncertainty.
Tom Kang, director at Counterpoint Research, noted that Micron’s briefing fell short compared to SK Hynix’s earlier announcement. SK Hynix stated that its HBM production capacity is largely sold out through 2025, a position Micron does not enjoy. Additionally, Samsung’s lead in the broader memory industry further highlights Micron’s relative vulnerabilities.
“This brings a reality check to the AI sector, which looks bubblish,” Kang said.
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