Shares of Micron Technology (MU) retreated approximately 2.2% in early trading Thursday, pulling back from their all-time closing high of $487.48 set on April 22. The stock hovered around $476.98 as investors digested fresh data from a key competitor and ongoing regulatory developments in Washington.
SK Hynix's Record Profit Highlights AI Demand Surge
South Korean memory chipmaker SK Hynix reported its highest-ever quarterly profit, underscoring the insatiable demand for high-bandwidth memory (HBM) used in artificial intelligence applications. According to SK Hynix executive Ki Tae Kim, customer demand for advanced memory chips now "far exceeds our production capacity," a situation the company expects to persist for at least the next three years. This supply-demand imbalance has been a major catalyst behind Micron's recent rally, but Thursday's pullback suggests some profit-taking after the stock surged 8.48% the previous session.
Washington Weighs Stricter Export Controls
Micron, the largest U.S.-based memory chipmaker, has intensified its lobbying efforts to tighten export controls on chipmaking equipment sold to Chinese competitors, according to a Reuters report on April 22. The push comes as a House committee advances the MATCH Act, legislation designed to close loopholes in existing export rules. If enacted, the bill could further restrict Chinese rivals' access to advanced semiconductor manufacturing tools, potentially benefiting domestic players like Micron.
Micron's Massive Capacity Expansion
To meet surging AI-related demand and defend its market position, Micron plans to invest more than $25 billion in capital expenditures this fiscal year, with another increase expected in 2027. Chief Business Officer Sumit Sadana attributed the "very significant increase" in capex primarily to construction costs. In Taiwan, Micron's acquisition of the Tongluo site is expected to begin contributing DRAM wafer production in the second half of 2027.
Analysts Warn of Potential Oversupply
However, JonesTrading strategist Mike O'Rourke cautioned that the aggressive capacity expansion could eventually push Micron back into commodity pricing territory as more supply hits the market. Analysts cited by Reuters noted that price momentum in key memory products is expected to lose steam after the second quarter, even if current capacity remains tight.
Micron's fiscal second-quarter revenue came in at $23.86 billion, with the company projecting $33.5 billion for the current quarter. CEO Sanjay Mehrotra described memory as a "strategic asset" for customers navigating the AI era. The board also increased the dividend by 30%, signaling confidence in the company's long-term prospects.
The broader market also weighed on Micron's shares Thursday, as a dip across Wall Street reflected investor concerns over geopolitical tensions between the U.S. and Iran, as well as a mixed batch of earnings reports. Despite the retreat, Micron's stock remains near its record close, keeping the company in focus as the market assesses whether the AI-driven memory shortage will persist and justify the sector's current investment spree.
