Micron shares fall after AI-fuelled rally despite blowout earnings

Micron Technology's MU shares fell sharply on Friday, giving up part of the gains recorded earlier in the week despite the memory chipmaker reporting stronger-than-expected quarterly results.

The stock declined nearly 5% in premarket trading as weakness spread across the broader semiconductor sector.

Other US chipmakers also traded lower, with Intel down just over 3%, Sandisk falling 5%, Arm shedding 4%, and Marvell declining 3.7%.

The decline came as investors remained cautious about the rising costs associated with artificial intelligence infrastructure, triggering a broader sell-off across global semiconductor stocks.

Semiconductor stocks under pressure worldwide

The weakness extended beyond the United States.

In Europe, ASML fell 2.2%, Infineon declined 3.7%, ASM International lost 2.8%, ST Microelectronics dropped 3.3%, and Be Semiconductor slipped 2%.

In Asia, Japanese conglomerate SoftBank led regional losses, plunging more than 12%.

The broader pullback followed a strong rally in AI-related semiconductor companies, even as Micron delivered robust financial results and issued an optimistic outlook.

Revenue beats expectations

MU reported third-quarter revenue of $41.46 billion, compared with $9.3 billion in the same period a year earlier.

The result exceeded analysts' expectations.

Adjusted earnings reached $25.11 per share on revenue of $41.5 billion, representing a 346% year-on-year increase.

Adjusted gross margin stood at 85%, while adjusted operating margin reached 81%.

The company also projected revenue of around $50 billion for the current quarter, compared with $11.3 billion in the corresponding period last year.

Micron also said customers had committed $22 billion to secure future memory chip supply.

Following the earnings announcement on Wednesday, Micron's shares surged more than 15% in a single session.

The stock has gained approximately 863% over the past year.

Micron overtakes Meta briefly in market capitalisation

The rally briefly pushed Micron ahead of Meta Platforms and close to Tesla in terms of market capitalisation on Thursday.

Micron's market value had peaked at $1.398 trillion on Thursday's session compared with Meta Platforms at $1.392 trillion.

Tesla stood at around $1.4 trillion.

Micron currently has a market capitalisation of $1.37 trillion.

The company first crossed the $1 trillion market valuation mark on May 26, joining a group of semiconductor companies benefiting from investor enthusiasm surrounding artificial intelligence infrastructure.

Micron said second-quarter revenue quadrupled as demand for memory chips continued to outpace supply.

The company described the market as being supported by a demand-driven chip shortage that it expects to continue beyond 2027, marking a change from earlier expectations that supply constraints would ease sooner.

Micron now has 16 long-term chip supply agreements in place.

Growth was primarily driven by the company's two data-centre business segments, which together generated $25 billion in revenue, up 415% from a year earlier.