Micron shares slip as hefty spending plans eclipse strong AI-fueled earnings
Micron's shares dropped more than 4% before the bell on Thursday, as the chipmaker's plans for heftier capex spending unnerved investors, taking the shine off another round of AI-fueled blockbuster quarterly earnings.
By Reuters |
Micron's shares dropped more than 4% before the bell on Thursday, as the chipmaker's plans for heftier capex spending unnerved investors, taking the shine off another round of AI-fueled blockbuster quarterly earnings.
Micron, whose shares have climbed more than 61% this year after surging over 240% in 2025, said it is boosting its 2026 capital spending plan by $5 billion to meet growing demand, bringing its total investment for the current fiscal year to more than $25 billion.
It added spending will rise again in 2027, with manufacturing expansion expected to drive construction-related costs more than $10 billion higher compared with 2026.
The chipmaker topped Wall Street expectations for the second quarter and forecast third-quarter revenue of $33.5 billion, plus or minus $750 million, compared with analysts' average estimate of $24.29 billion according to data compiled by LSEG.
"Investors wager that these are peak earnings and will be unsustainable," said Mike O'Rourke, chief market strategist at JonesTrading.
"Micron also increased its capex forecast to continue to add production capacity. That reinforces the belief that the memory shortage is a temporary phenomenon and business will return to its commodity nature in coming years as capacity comes online."
The chipmaker is one of only three global suppliers of high-bandwidth memory used in AI systems, along with South Korea's Samsung and SK Hynix.
Shares of Samsung and SK Hynix closed down 3.84% and 4.07%, respectively, on Thursday.
Shares of other U.S. memory makers such as Western Digital, Seagate Technology and Sandisk fell between 2% and 4% premarket.
As U.S. tech giants pour billions into long-term AI data-center buildouts, the resulting surge in computing capacity is driving a steep jump in demand for high-end memory chips.
That scramble for supply has created a crunch and driven prices higher, a backdrop that has helped Micron book record profit margins in the quarter ended February.
Micron, whose shares have climbed more than 61% this year after surging over 240% in 2025, said it is boosting its 2026 capital spending plan by $5 billion to meet growing demand, bringing its total investment for the current fiscal year to more than $25 billion.
It added spending will rise again in 2027, with manufacturing expansion expected to drive construction-related costs more than $10 billion higher compared with 2026.
The chipmaker topped Wall Street expectations for the second quarter and forecast third-quarter revenue of $33.5 billion, plus or minus $750 million, compared with analysts' average estimate of $24.29 billion according to data compiled by LSEG.
"Investors wager that these are peak earnings and will be unsustainable," said Mike O'Rourke, chief market strategist at JonesTrading.
"Micron also increased its capex forecast to continue to add production capacity. That reinforces the belief that the memory shortage is a temporary phenomenon and business will return to its commodity nature in coming years as capacity comes online."
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The chipmaker is one of only three global suppliers of high-bandwidth memory used in AI systems, along with South Korea's Samsung and SK Hynix.
Shares of Samsung and SK Hynix closed down 3.84% and 4.07%, respectively, on Thursday.
Shares of other U.S. memory makers such as Western Digital, Seagate Technology and Sandisk fell between 2% and 4% premarket.
As U.S. tech giants pour billions into long-term AI data-center buildouts, the resulting surge in computing capacity is driving a steep jump in demand for high-end memory chips.
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That scramble for supply has created a crunch and driven prices higher, a backdrop that has helped Micron book record profit margins in the quarter ended February.
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