Micron Technology (NASDAQ: MU) saw its shares slide 8.9% during Tuesday’s regular trading session, closing at $820.53, as mounting concerns over exposure to China’s rapidly advancing DRAM sector overshadowed a quarterly earnings report that surpassed analyst expectations. The stock touched an intraday low of $789.09 before paring some losses in after-hours trade, where it recovered roughly 1.4% to hover near $832.
The decline extends a brutal stretch for the memory chipmaker. Over the past five sessions, Micron has shed 15.5% of its value, and since the start of July, the stock has plunged approximately 29% based on closing prices. Tuesday’s close leaves the shares 34.6% below their all-time high of $1,255.00, set on June 25.
Earnings Beat, but Multiple Compression
Micron’s fiscal fourth-quarter earnings per share are expected to come in at $31.16, according to the initial consensus from FactSet. That figure has edged up from $31.06 one month earlier, reflecting a modest 0.3% increase. Despite the upward revision to estimates, investors are clearly focusing on valuation rather than near-term profitability.
The stock now trades at just 6.6 times its annualized guided earnings per share — a sharp contraction from the 10.1 times multiple it commanded at the June peak. This represents a de-rating of approximately 3.5 turns, signaling that the market is pricing in a meaningful earnings decline beyond the current quarter.
China Competition Sparks Selloff
The catalyst for Tuesday’s selloff was the blockbuster Shanghai debut of CXMT Corp (SHA: 688825), a Chinese DRAM manufacturer that raised $8.6 billion in its initial public offering. Shares of CXMT soared on their first day of trading, propelling the company’s market capitalization to roughly $539 billion. The event reignited fears that China’s memory chip capacity could ramp up faster than previously anticipated, potentially flooding the market with commodity DRAM and pressuring pricing across the industry.
“This is more of a long-term story,” said Cameron Systermans, who oversees multi-asset strategies for Mercer in Asia. “CXMT is still several years behind the top HBM suppliers.” Nevertheless, the market showed little differentiation, punishing memory stocks broadly.
Broader Sector Rout
Micron was not alone in the downturn. SanDisk Corp (NASDAQ: SNDK) tumbled 14.25%, SK hynix Inc. ADR (NASDAQ: SKHY) slipped roughly 9%, and Samsung Electronics Co., Ltd. (KRX: 005930) fell 13.4%. The PHLX Semiconductor Index dropped approximately 4.5%, reflecting the widespread nature of the selloff.
Revenue and Margin Strength
Micron’s initial guidance for the fiscal fourth quarter remains positive. The company projects revenue of $50 billion, plus or minus $1 billion, which would represent a 20.6% increase from fiscal Q3 at the midpoint. Gross margin is expected to be close to 86%, and adjusted earnings per share are guided to $31, with a possible variance of $1.
Breaking down the revenue, Cloud Memory and Core Data Center together generated $25.29 billion, accounting for 61% of total revenue. Gross margins for these segments were 83% and 87%, respectively. While these units are not exclusively high-bandwidth memory (HBM), the present profit engine is clearly tied to data center memory — a segment less exposed to Chinese competition than commodity DRAM.
Strategic Contracts Provide Some Buffer
Micron has also secured more contract coverage compared to previous cycles. Sixteen strategic deals encompass around 20% of DRAM volume, while agreements span one-third of NAND volume through 2030. Fourteen of these contracts lock in approximately $100 billion in minimum revenue. The company anticipates $22 billion in deposits and related commitments. Chief Executive Sanjay Mehrotra said the agreements will enhance “durability and predictability,” though they apply to only a portion of Micron’s production, and certain prices remain tied to market dynamics.
Outlook and Key Risks
The 6.6-times ratio reflects just one robust quarter on an annualized basis, and shifts in memory pricing can precede forecast changes. Rapid expansion of Chinese output may weigh on the wider DRAM market, while reduced AI investments would further impact HBM demand. For now, near-term forecasts remain steady, but investors appear to be anticipating weaker results for Micron after the coming quarter.
Looking ahead, SK hynix will report earnings on Wednesday, the same day the Federal Reserve announces its rate decision. Several key AI purchasers are also expected to release results this week, providing further clues about the demand trajectory for memory chips.
