Micron's Record Results and Auto Ambitions Can't Escape the Semiconductor Selloff
Published on 07/19/2026 at 11:52 | Redaktion boerse-global.de
Micron Technology is threading a needle between its strongest-ever financial performance and a punishing sector-wide rout. The memory chip maker posted a record quarterly revenue of $41.46 billion for its third fiscal quarter of 2026 — a 346% surge from a year earlier — while issuing guidance for the fourth quarter that calls for around $50 billion in revenue, a gross margin of roughly 86%, and adjusted earnings per share of $31.00. Yet the stock has shed nearly 13% in a single week and sits about 32% below the all-time high of 1,103.80 euros it reached on June 25.
The disconnect stems from a trigger that has little to do with Micron's own operations. On July 18, Chinese AI firm Moonshot unveiled Kimi K3, an open-source language model boasting 2.8 trillion parameters. The announcement rattled the narrative that U.S. hyperscalers' massive AI infrastructure spending is unassailable. The Philadelphia Semiconductor Index tumbled into bear territory, losing more than 18% in July alone and sitting roughly 20% below its June 22 peak. The broader U.S. indexes — the Dow Jones, S&P 500, and Nasdaq — each fell between 0.77% and 1.40% on the same Friday, but the pain was concentrated in chip stocks.
Amid this turmoil, Micron has been quietly strengthening its non-AI business. On July 16, the company disclosed long-term supply agreements with Qualcomm and Harman, the audio specialist, to secure stable pricing and supply chains for memory components used in advanced driver-assistance systems and digital cockpits. The deals underscore a strategy to diversify beyond the data-center boom into automotive, smartphones, PCs, and robotics — the "connected car" being a particular focus. The move also adds predictability to Micron's revenue streams at a time when short-term volatility has spooked investors.
Should investors sell immediately? Or is it worth buying Micron?
The market's reaction to the broader selloff has been stark. Micron closed Friday at 746.30 euros, essentially flat on the day but down nearly 13% for the week and 17.74% over the past month. The stock has fallen by roughly 32% from its late-June peak. Yet on a year-to-date basis it remains up 196%, a reminder of just how ferocious the preceding rally was. Analysts have largely held firm. The consensus rating remains "Strong Buy," with an average 12-month price target of $1,569.29 among a panel of 45 houses — implying upside of more than 45% from current levels. TD Cowen set a target of $1,500, pointing to continued CPU strength and long-term DRAM contracts that signal deepening supply tightness.
Micron's fundamental backdrop supports that optimism. The company has signed 16 long-term take-or-pay contracts worth a combined $22 billion, and its HBM4 deliveries for Nvidia's Vera-Rubin platform — which began in March 2026 — are ramping at double the pace of the prior HBM3E generation. HBM capacity is sold out through the end of fiscal 2026. For the full fiscal year, analysts project earnings per share of $72.75 on revenue of $129.6 billion. At a price-to-earnings ratio that briefly fell below 7 in July, Micron ranked among the cheapest stocks in the Nasdaq 100 — a stark contrast to the double-digit monthly decline.
Not everyone is convinced the current cycle is different. Some investment firms have warned that the AI memory boom may prove cyclical, not structural, citing historical precedents such as 2018, when Micron traded at a P/E of 4.5 before the stock crashed 57%. While investors like David Tepper's Appaloosa Management tripled their Micron position in the fourth quarter of 2025, the broader question is whether take-or-pay contracts covering roughly 40% of revenue can cushion a prolonged downturn. The answer may emerge when Micron reports fiscal fourth-quarter results, expected between September 22 and 29. Until then, the tension between record execution and macro-driven selling looks set to persist.
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