A 1,200% Profit Surge and $22 Billion in Guaranteed Orders: Why Micron's Stock Is Still Falling
Published on 07/19/2026 at 17:32 | Redaktion boerse-global.de
Micron Technology just delivered one of the most jaw-dropping quarters in semiconductor history: revenue of $41.46 billion, up 346% from a year earlier, and non-GAAP earnings of $25.11 per share — a 1,200% leap from the $1.91 earned in the same period last year. The company guided for even more in the current quarter: roughly $50 billion in revenue, a gross margin near 86%, and adjusted EPS of $31, all comfortably above analyst forecasts. And yet the stock closed Friday at €746.30, down 32% from its 52-week high of €1,103.80 hit on June 25. Something is seriously out of sync.
The immediate catalyst for the selloff was not a weak earnings print but an external shock. On Friday, the Chinese AI startup Moonshot unveiled Kimi K3, an open-source language model with 2.8 trillion parameters. The announcement reignited fears that the massive infrastructure spending by US hyperscalers on AI may be overdone — a narrative that sent the Philadelphia Semiconductor Index into bear market territory. That index now sits roughly 20% below its June 22 record, having lost more than 18% in July alone. Broader US indexes also slipped, with the Dow, S&P 500, and Nasdaq falling between 0.77% and 1.40% on Friday, but the damage in chip names was far more acute.
For Micron, the decline has been steep and sustained. Over the past four weeks, the stock has lost roughly 18%. The 50-day moving average of €826.82 now sits 10% above the current price, and the relative strength index at 40.9 signals the stock has exited overbought territory without yet reaching oversold levels. Annualized 30-day volatility exceeds 100%. The drop from the June high represents a roughly one-third haircut, wiping out a portion of the spectacular run that saw Micron double its market capitalization in just 48 days — from $500 billion to $1 trillion on May 26, the fastest such climb ever for a chipmaker.
Should investors sell immediately? Or is it worth buying Micron?
None of this deterioration reflects any deterioration in business fundamentals. On the contrary, Micron’s HBM4 shipments for Nvidia’s Vera-Rubin platform began in March 2026, and the ramp is reportedly running at double the pace of the prior HBM3E generation. The company has locked in roughly $22 billion in take-or-pay contracts across 16 long-term agreements, and its HBM capacity is effectively sold out through the end of 2026. Meanwhile, roughly 40% of overall revenue is now secured by long-term contracts with price floors — a level of forward visibility that is highly unusual for the memory industry.
Wall Street remains broadly bullish. An aggregate of 45 analysts rates Micron a strong buy, with a median price target of $1,486 in the secondary market and €1,298.92 among the German-based panel cited in the primary source. TD Cowen set a target of $1,500, citing continued CPU strength through late 2026 and DRAM supply agreements that point to deepening tightness. Consensus projections for fiscal 2026 stand at $72.75 in EPS and $129.6 billion in revenue. On a trailing basis, Micron trades at a price-to-earnings multiple below 7, making it one of the cheapest stocks in the Nasdaq 100 — a stark contrast to the double-digit percentage losses it has incurred.
The company is acting as if the good times will last. Micron raised its planned US fab investments by $50 billion to a total of $250 billion, with spending spread through 2035 on sites in New York, Idaho, and Virginia. The goal is to manufacture 40% of its DRAM output domestically within ten years. Management has publicly stated that the current tight market conditions in DRAM and HBM are likely to persist beyond 2027. That is a decade-long bet that the current pricing power is structural, not just a passing supply squeeze.
Still, not every investor is buying the permanence thesis. Investment firms linked to the John Templeton tradition have warned that the memory industry has historically been intensely cyclical — and that the current boom may follow the same pattern. They point to 2018, when Micron’s shares traded at a P/E of just 4.5 before collapsing 57%. For now, the bull case is built on the idea that AI-driven demand for high-bandwidth memory represents a genuine structural shift. But with one Chinese model launch capable of shaking confidence in the entire sector, the margin for error is razor-thin. The next few weeks, particularly the capital-expenditure signals from major US tech companies, will test whether Micron’s $250 billion wager is prescient — or premature.
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Micron Stock: New Analysis - 19 July
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