Why Micron Technology (MU) fell 11.0% after Nvidia HBM4 approval amid jitters in AI chip spending

• At COMPUTEX 2026 earlier this month, Micron Technology showcased a full stack of AI-optimized memory and storage products, from HBM4 and advanced DRAM to ultra-high capacity SSDs, targeted at data center and edge AI workloads, while signing multi-year supply agreements to secure long-term demand amid industry-wide memory shortages.
• At the same time, sector-wide concerns about the pace of AI chip spending sparked by Broadcom’s cautious outlook triggered intense profit-taking in semiconductor stocks, highlighting how quickly sentiment can fluctuate despite Nvidia’s formal certification of Micron as an HBM4 supplier for its next-generation Vera Rubin AI platform.
• Here, we examine how Micron’s new long-term supply agreement and HBM4’s role with Nvidia could reshape the company’s AI-driven investment story.

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Micron Technology Investment Story Summary

To own Micron today, you need to believe that AI will keep memory at the center of the stack and that the current HBM shortage supports a healthy economy, even if sentiment around AI spending remains volatile. While the main short-term catalyst is Micron’s upcoming third-quarter earnings and guidance that defies sky-high expectations, the biggest risk is that AI infrastructure spending across the sector slows faster than current order volumes and long-term contracts suggest. Recent news doesn’t materially change that risk, but it puts a spotlight on it.

What changes the story a bit is Micron’s move to a multi-year strategic customer agreement, announced at the same time as the COMPUTEX portfolio update, reinforced by comments that the new fab will not add meaningful capacity until fiscal year 2028. These agreements are a two-way agreement for shareholders. This means it can support visibility and margin in a tight market, but could also cap upside if memory prices continue to rise unexpectedly.

But investors should also note that behind all the excitement, a new long-term contract for Micron is a possibility.

Read all about Micron Technology (it’s free!)

The Micron Technology story projects sales of $135 billion and profits of $61.3 billion by 2029.

Find out how Micron Technology’s projections resulted in a fair value of $584.62, which is 32% lower than the current price.

explore other perspectives

While the consensus is that Micron is on a strong trajectory, with the most pessimistic analysts expecting sales of only about US$92.3 billion and profits of only US$33.1 billion by 2029, this latest AI memory news could either allay concerns about demand or add to concerns about future oversupply and margin pressure.

Check out the other 25 fair value estimates for Micron Technology – find out why the stock is worth less than half its current price.

The verdict is yours

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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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