MU stock falls 7% as memory stocks face the heat

Micron Technology MU shares fell on Tuesday as the broader semiconductor sector came under pressure from rising Treasury yields and concerns about higher financing costs for artificial intelligence infrastructure.

The decline interrupted a strong run for the memory-chip maker, which had climbed above $1,000 in the previous session.

Micron shares fell 7.7% to $934.

South Korean memory-chip maker SK Hynix fell 9.2%, while SanDisk declined nearly 10%.

Rising bond yields weigh on chip stocks

The semiconductor selloff came as Treasury yields climbed, raising concerns about borrowing costs and the potential impact on companies investing heavily in AI infrastructure.

Micron's total debt stood at $5.72 billion as of May, meaning the main concern is less about the company's own borrowing and more about whether its major customers could reduce spending on AI infrastructure as funding becomes more expensive.

Achilleas Georgolopoulos, a senior market analyst at Trading Point XM, said AI-related investment is heading toward trillions of dollars and that higher funding costs, energy prices and commodity costs could make that investment more expensive.

The pressure extended across the semiconductor industry. Advanced Micro Devices fell 5.4%, Intel dropped 7.3% and Nvidia declined 2.4%. Custom-chip makers Marvell Technology and Broadcom fell 8.4% and 2.9%, respectively.

Coherent, Ciena and Lumentum Holdings were among the S&P 500's biggest decliners, each falling at least 9% during Tuesday's session.

Micron's strong gains raise profit-taking concerns

Micron has gained more than 700% over the past 12 months, making the stock particularly sensitive to changes in investor expectations and market sentiment.

David Wagner, head of equity at Aptus Capital Advisors, said the latest decline could indicate that investors were taking profits after recent gains in AI hardware stocks.

Ion Jauregui, an analyst at ActivTrades, also pointed to the scale of recent gains, saying volatility and profit-taking could remain elevated among high-beta technology stocks.

The pullback follows a period of strong momentum across chip stocks as investors have become increasingly confident about the durability of AI-related capital spending.

However, rising expectations have also increased the potential for sharp moves when sentiment changes.

AI developments added another factor to the market's focus. Jefferies equities trading analyst Jeffrey Favuzza noted that the selloff followed weakness in Asia-listed technology stocks and could be linked to concerns about elevated Treasury yields.

Memory demand remains a key support

Despite the selloff, analysts pointed to continued demand for memory and storage products as a potential support for the sector.

Paul Meeks, head of technology research at Freedom Capital Markets, said memory companies have "sterling fundamentals," while bearish investors remain concerned about a potential collapse in commodity chip pricing.

Meeks also highlighted long-term customer agreements being signed by Micron and SanDisk.

Both companies have said floor pricing under multiyear agreements is guaranteed to be higher than peak pricing seen during previous memory booms.

Jauregui said demand for memory and storage products remains strong and is increasing rapidly.

He added that greater confidence in sustained AI capital expenditure should support the broader semiconductor sector.

However, with expectations rising alongside share prices, investors could remain sensitive to any signs that AI spending or semiconductor demand is weakening.

Jauregui said he remained bullish on the structural AI story while cautioning about short-term risks if expectations soften.