Micron's Memory Market Paradox: Record Backlog Meets a Market Focused on China
Published on 08/03/2026 at 21:30 | Redaktion boerse-global.de
The disconnect between Micron Technology's operational performance and its stock price has rarely been starker. The memory-chip maker just posted numbers that would have seemed unthinkable a year ago, yet its shares have shed roughly a third of their value since late June. The market's anxiety centers on one name: CXMT, the Chinese DRAM manufacturer that is rapidly scaling up.
The CXMT Factor
CXMT's share of the global DRAM market has more than doubled in a year, jumping from 3 percent to 8 percent. The Chinese player has plans for a second fab in Beijing that would triple its capacity to 600,000 wafers per month. By 2027, CXMT could be producing 350,000 wafers monthly — approaching Micron's current capacity of 375,000 wafers.
That trajectory alone explains much of the recent selling pressure. But the threat narrative misses a crucial distinction. CXMT remains strong in legacy DDR4 and is only beginning to move into DDR5. In high-bandwidth memory (HBM), the segment essential for AI accelerators and where Micron generates its profits, CXMT has yet to establish a meaningful presence.
Record Numbers, Falling Shares
The operational picture could hardly be more different. In the third quarter of fiscal 2026, which ended May 28, Micron delivered record revenue of $41.4 billion — up 346 percent year over year. Earnings per share hit $24.67, a 1,368 percent surge. All four business segments grew, driven by AI-fueled demand for memory across data centers, PCs, smartphones, and increasingly automobiles.
Should investors sell immediately? Or is it worth buying Micron Technology?
The company's gross margin reached a record 84.9 percent, a figure that surpasses the profitability of tech giants like Meta and Alphabet. That margin strength isn't a snapshot; it's underpinned by contractual commitments. Sixteen strategic customer agreements run through 2030, guaranteeing minimum revenue of roughly $100 billion. Customers have already made $22 billion in prepayments.
For the current quarter ending in August, Micron forecasts revenue of $50 billion and EPS of $30.73 — guidance pointing to continued acceleration rather than cooling.
A Sector-Wide Sell-Off
Micron's decline hasn't happened in isolation. Memory and AI-related stocks have been under pressure since late July, with a broad semiconductor sell-off intensifying recently. Western Digital, Applied Materials, Marvell, AMD, and Nvidia all slid in tandem. Weak preliminary results from Samsung and reports of a DeepSeek AI-chip project — aimed at reducing China's dependence on Nvidia and Huawei — added fuel to the fire.
The pain extended to Japan, where Tokyo Electron fell nearly 11 percent and Kioxia dropped more than 18 percent. A strategist at Standard Chartered pointed to media reports on China's ambitions in memory chips and lithography equipment as a key driver of the negative sentiment. Analyst warnings that memory prices could peak as early as 2027 have compounded the unease.
Demand Questions Emerge
Skepticism is also building around the sustainability of AI infrastructure spending. Uber reportedly exhausted its entire 2026 AI budget within four months, driven by usage of Anthropic's Claude Code. Amazon and Walmart have imposed caps on employee AI usage to contain costs. A UBS survey found that 60 percent of companies are shifting tasks to cheaper, more efficient AI models — a trend that could eventually dampen memory demand.
Not every signal points to weakness, however. Amazon raised its 2026 capital expenditure plan from $200 billion to $220 billion, explicitly citing rising memory costs. AWS cloud revenue grew 37 percent to $42.2 billion in the same period. Micron CEO Sanjay Mehrotra expects supply-demand dynamics to remain tight beyond 2027, noting that HBM production consumes three times the wafer capacity of conventional DDR5.
Micron Technology at a turning point? This analysis reveals what investors need to know now.
Valuation and Technicals
The stock's decline has pushed its valuation to levels many analysts consider historically cheap. Wall Street projects fiscal 2027 earnings of $153.74 per share, putting the stock at a price-to-earnings ratio of just 5.3 at current levels. Some analysts caution that this apparent bargain may be misleading: Micron and its rivals are aggressively expanding fabrication capacity, which could erode pricing power over time.
At the most recent close of €691.20, following a 3.29 percent drop on Monday, the stock sits roughly 37 percent below its 52-week high of €1,103.80, reached in late June. It's now 16.23 percent below its 50-day moving average — a sign of leveraged positions being unwound — but remains 56.18 percent above its 200-day average, indicating the long-term uptrend is dented but intact. The RSI stands at 41.4, signaling neither overbought nor oversold conditions.
The stock's 9.38 percent weekly decline stings, but it comes against a year-to-date gain of 183.86 percent. The fourth-quarter report due at the end of August will be the key test — whether the billions in committed AI memory demand can outweigh concerns about the durability of the infrastructure spending cycle.
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