Shares of Micron Technology moved lower in Thursday trading, a reaction that stood in contrast to the company's stellar financial performance and optimistic guidance. The stock retreated approximately 1.7% to $454.00 by mid-morning, having opened the session at $422.90 and touched an intraday low of $421.69 earlier. This pullback occurred within a broader market that was also trending downward, with major indexes slipping amid elevated oil prices near $112 a barrel and cautious signals from the Federal Reserve regarding interest rates.
Record Results and AI Optimism
For its fiscal second quarter, Micron reported revenue of $23.86 billion, a record for the company. Adjusted earnings per share came in at $12.20. The outlook for the current quarter was even more striking, with management projecting revenue of $33.5 billion, plus or minus $750 million. This forecast dramatically exceeded the average Wall Street estimate of $24.29 billion. Adjusted earnings for the quarter are projected to be $19.15 per share. The company also announced a 30% increase in its quarterly dividend, raising it to 15 cents per share.
Leadership attributed the strength to the critical role of memory in the artificial intelligence era. "Memory has become a strategic asset for our customers in the AI age," stated Chief Executive Sanjay Mehrotra. Chief Financial Officer Mark Murphy noted the quarter ended with "the highest net cash position" in Micron's history, with cash generated after capital spending reaching $6.9 billion.
The Capex Overhang
Investor sentiment, however, was tempered by a substantial revision to the company's capital expenditure plans. Micron now anticipates its fiscal 2026 capex will exceed $25 billion, a $5 billion increase from its prior estimate. The primary driver for this hike is the expansion of its facility in Tongluo, Taiwan, with additional spending on U.S.-based fabrication plants also contributing. The company expects capital expenditures to climb further in 2027.
This aggressive spending plan raised questions among investors about whether soaring profits can keep pace with the even sharper rise in investment. The concern is amplified by Micron's already spectacular stock performance; shares had surged over 61% year-to-date in 2026, following a 240% gain in 2025. Along with rivals Samsung Electronics and SK Hynix, Micron dominates the global supply of high-bandwidth memory (HBM), a key component for AI processors.
Market Concerns and Analyst Views
Some market participants worry the industry may be accelerating spending just as the cycle could be nearing a peak. "The bigger budget reinforces the belief that the current shortage might not last indefinitely, as new supply could flip the market balance," commented Mike O'Rourke of JonesTrading.
Other analysts see the logic behind the move. Ben Bajarin of Creative Strategies suggested the expanded investment "makes sense" provided that robust demand continues at its current pace. Chief Business Officer Sumit Sadana explained to Reuters that "construction activity is really driving" the surge in spending.
Micron itself expects supply-demand constraints for its core memory and storage products to persist beyond calendar 2026. To meet this demand, the company is ramping up capacity not only in Taiwan and the United States, but also in Japan, Singapore, and India.
Broader Market Context
The decline in Micron shares contributed to pressure on growth-oriented stocks, which traders have been quick to sell off in the current high-rate environment. Despite the day's retreat, Micron remains significantly higher for the year. The company's performance and spending plans underscore the high-stakes race in semiconductor manufacturing, where massive investments are required to capture the opportunities presented by the AI revolution, even at the risk of eventually creating oversupply.
