Micron shares slide on supply fears after $41.5B Q3 revenue
Micron Technology posted record third-quarter revenue of $41.5 billion and issued $50 billion guidance, yet its stock dropped 14% this week as investors weighed risks from a major Chinese competitor's IPO and potential export controls.
Micron Technology shares have surrendered 14% this week, closing at $853.20 on Thursday, despite the chipmaker posting fiscal third-quarter results that obliterated expectations. The company reported revenue of $41.46 billion for the quarter ended in June, a 345.7% increase from the prior year, alongside non-GAAP earnings per share of $25.11.
The forward outlook did little to calm the sell-off. Management guided to $50 billion in fourth-quarter revenue with gross margins approaching 86%. These robust figures are underpinned by a structural shortage in the memory market, with the company having already shipped over $1 billion in high-bandwidth memory 4 revenue.
The sharp reset in the stock price, which still leaves the shares up 199% year-to-date, stems from broader sector anxieties. Investors are reacting to capital expenditure concerns surrounding Taiwan Semiconductor Manufacturing Company, rumors of stricter HBM export controls, and the planned $8.5 billion initial public offering of Chinese competitor CXMT.
Chief Executive Sanjay Mehrotra pushed back against the negative sentiment, pointing to enduring supply constraints. "DRAM and NAND industry demand continues to significantly exceed industry supply," Mehrotra told analysts. "We expect tight conditions to persist beyond calendar 2027." The company currently holds 16 Strategic Customer Agreements representing roughly $100 billion in remaining performance obligations.
Micron’s trajectory is mirrored by its closest peers, validating the broader AI memory boom. Rival Sandisk recently posted 251% revenue growth at 78% gross margins. Western Digital has similarly confirmed surging demand across the sector.
Wall Street remains sharply divided on how to value the stock following the pullback. One firm maintains a high-confidence price target of $928.59, implying an 8.84% upside from Thursday's close.
Conversely, KeyBanc raised its target to $1,750 during the recent dip. Bullish scenarios project the stock could reach $1,330.10 within twelve months, representing a 55.9% return, assuming HBM pricing and contract volumes track management's projections. The central question for market participants is whether the prospect of CXMT's expanded market presence can actually disrupt a supply deficit that Micron's leadership expects to last for years.
