Micron stock continues slide, despite massive data center demand

Memory spot shaper Micron (MU) banal slid successful the aboriginal trading Tuesday, arsenic the representation manufacture continues to grapple with the fallout from Google’s (GOOG, GOOGL) TurboQuant compression algorithm, which claims to amended AI exemplary efficiency.

The fearfulness among investors is that much businesslike AI volition pb to a driblet successful request for high-bandwidth memory, a cardinal constituent successful AI information centers that has go progressively important arsenic AI models person continued to balloon successful size.

But successful a enactment to investors connected Thursday, Morgan Stanley expert Joseph Moore said that contempt continued ratio improvements successful AI, “There’s conscionable nary denotation that request for representation oregon retention is going down.”

Moore besides notes that representation volition play a cardinal relation successful the maturation of agentic AI, which tin execute tasks either semi-autonomously oregon afloat connected its own. That’s due to the fact that erstwhile an AI cause performs a task, accidental opening a website and navigating to a leafage for a user, it’s leaning connected the processing powerfulness indispensable to tally the exemplary and going to that web page, 2 things that volition necessitate much memory.

“It’s our presumption that the champion mode to play maturation successful wide intent servers volition beryllium memory,” helium wrote.

“AMD (AMD) and Intel (INTC) should spot immoderate payment from rising prices, but the increases are measured — processors are not a commodity. Both stocks person higher multiples pricing successful prospects for Intel successful Foundry, and AMD successful AI, which to america stay little certain; buying representation stocks astatine these levels seems a higher leverage mode to play this agentic strength.”

Micron banal is down much than 27% since it reported blow-out 2nd 4th results connected March 18. At the time, the institution posted net per stock (EPS) of $12.20 connected gross of $23.86 billion.

That amounted to an EPS summation of 682% year-over-year and a gross leap of 196%. Wall Street was anticipating EPS of $9.00 connected gross of $19.7 cardinal twelvemonth implicit year.

Micron besides said it expects Q3 gross supra analysts’ forecasts.

But the shares of the institution person fallen ever since, dragging down rival representation spot makers SK Hynix (000660.KS) and Samsung (005930.KS) stocks.

Despite the caller declines, the 3 companies’ stocks person been connected a tear. Micron is inactive up 263% implicit the past 12 months, portion SK Hynix has climbed 323% successful the period. Samsung banal is besides up, rising 189%.

The monolithic request for representation successful AI information centers, however, has led to a planetary shortfall for the remainder of the tech industry, creating a broader representation situation that analysts accidental volition unit companies ranging from machine and smartphone makers to either summation the prices of their representation -dependant products oregon instrumentality a deed to their margins.