Micron Technology (MU) shares climbed 8.2% in Nasdaq premarket trading on Monday, recovering a portion of the steep losses suffered in Friday's broad chip selloff. The stock changed hands at $935.07 ahead of the opening bell, following a close of $864.01 on Friday. The rebound came as investors digested Nvidia's confirmation that it will continue sourcing high-bandwidth memory (HBM) from both Micron and Samsung, alleviating concerns that SK Hynix would become the exclusive supplier for the AI chip leader.
Market Context and Friday's Rout
Friday's selloff erased over $1 trillion in market value from U.S.-listed chipmakers, with Micron shares tumbling 11% and wiping out approximately $127 billion in value, according to Reuters. The Nasdaq Composite fell 4.18%, while the Nasdaq 100 dropped 4.77%. The downturn was triggered by Nvidia's announcement of a multi-year technology partnership with SK Hynix, which initially raised fears among investors that Micron and Samsung might lose their place in Nvidia's HBM supply chain.
Nvidia's Partnership and HBM Supply Dynamics
Nvidia announced several deals with South Korean companies, including SK Hynix, Naver, SK Telecom, and Doosan, aimed at securing memory chip supply for AI systems. SK Hynix agreed to a multi-year technology partnership to develop advanced memory for global AI data centers. Nvidia CEO Jensen Huang stated that "SK Hynix will continue to be Nvidia's largest memory partner," according to Reuters. However, Barron's reported that investors found relief when Nvidia clarified it would continue purchasing HBM4 from Micron and Samsung as well, easing speculation that SK Hynix would become the sole supplier.
Analyst Upgrades and Price Targets
Brokerage firms moved to raise their price targets on Micron following the news. Cantor Fitzgerald lifted its target to $1,500 from $700, maintaining an Overweight rating, as reported by MT Newswires. Wells Fargo also boosted its target to $1,220 from $550, keeping an Overweight rating. These upgrades reflect confidence in Micron's position in the AI memory market and its ability to capitalize on growing demand for HBM and other advanced memory products.
Micron's AI Memory Strategy
At the Computex conference last week, Micron executives emphasized the company's focus on AI-driven memory solutions. Sumit Sadana, executive vice president and chief business officer, stated, "System performance is now driven by memory bandwidth and memory capacity." Micron highlighted its HBM, DRAM, and NAND products designed for AI data centers. DRAM serves as short-term memory for servers, PCs, and phones, while NAND provides flash storage. The company's strategy aligns with CEO Sanjay Mehrotra's earlier comment that "memory has become a strategic asset for our customers."
Earnings Preview and Financial Performance
Micron is scheduled to report its fiscal third-quarter earnings on June 24, with the conference call set for 2:30 p.m. Mountain time. In March, the company posted fiscal Q2 revenue of $23.86 billion, a significant increase from $8.05 billion a year earlier. Micron forecast Q3 revenue of $33.5 billion, plus or minus $750 million. Traders are keenly watching for updates on orders, pricing trends, and whether AI memory demand is broadening beyond the largest buyers.
Risks and Outlook
While Monday's premarket rebound offered a measure of relief, risks remain. Extended-hours trading often experiences higher volatility and lower liquidity, so price movements can be exaggerated. Potential headwinds include persistent inflation, a potential slowdown in AI-chip demand, or increased competition from SK Hynix and Samsung in Nvidia's next memory cycle. Any of these factors could pressure Micron's stock again. Still, the company's strong earnings trajectory and strategic positioning in the AI memory market provide a foundation for cautious optimism among investors.
