Micron's Record Quarter Collides With a New China Threat
Published on 08/02/2026 at 14:51 | Redaktion boerse-global.de
Investors are staring at a paradox: Micron Technology just delivered the strongest quarter in its history, yet the stock keeps sliding. The reason is a fresh competitive worry from Shanghai that has upended what should have been a straightforward celebration of record numbers.
The shares closed Friday at €714.70, down 5.86% in a single session. That leaves the stock roughly 35% below its late-June record high of €1,103.80, with a 30-day decline of more than 21%. The pullback has been sharp, but it comes after a staggering run — the stock is still up 183.50% year-to-date and 647.28% over the past twelve months, among the strongest performances in the entire tech sector.
A New Rival Emerges
The immediate trigger for the latest bout of selling is a Chinese initial public offering. ChangXin Memory Technologies, known as CXMT, has made its debut on the Shanghai Stock Exchange. The company generates nearly all of its revenue from DRAM chips — the very segment where Micron has long held sway.
CXMT is not yet considered a peer competitor. But if its investments in high-bandwidth memory technology pay off, that calculus could shift. Micron itself has newly flagged the risk in its own filings.
Should investors sell immediately? Or is it worth buying Micron Technology?
Morningstar, however, sees formidable obstacles ahead. CXMT lacks access to advanced EUV lithography, a critical technology for cutting-edge chip manufacturing. The research house describes this as a "significant technological barrier" that, in its assessment, makes it unlikely the Chinese supplier can close the gap with the global leaders anytime soon.
The competitive concern lands at an awkward moment. Micron's third fiscal quarter, which ended May 28, 2026, produced revenue of $41.5 billion — more than the company generated in any full fiscal year in its history, including the previous record year of 2025, when it booked $37.4 billion.
The bottom line grew even faster. Micron posted GAAP net income of $28.2 billion on a gross margin of 84.6%. Operating cash flow doubled to $25.4 billion, and after capital expenditures of $7.1 billion, the company still generated $18.3 billion in free cash flow — in a single quarter.
Management expects more of the same. The fourth-quarter guidance calls for revenue around $50 billion, with gross margin approaching 86%. The projected earnings per share of roughly $30.73 annualizes to about $123.
A Valuation That Defies the Growth
Despite the recent slide, the valuation relative to growth looks strikingly cheap. Micron trades at just 5.8 times forward earnings — an unusually low multiple for a technology company.
Analysts attribute the discount to the cyclical nature of the business. Memory chip makers have historically been treated as cyclicals, and even strong growth rarely earns them premium valuations.
That cyclicality remains the central uncertainty. Eventually, memory supply will outstrip demand and prices will fall. Some market observers argue this turning point could arrive later than in previous cycles, thanks to the multi-year AI supply contracts Micron has already locked in with customers.
The stock's technical picture is mixed. Shares trade 16.25% below their 50-day moving average of €853.41 but remain 56.92% above the 200-day average. The 14-day relative strength index of 42.9 suggests the stock is not yet oversold — meaning there could be further downside if concerns about Chinese competition or broader doubts about AI chip valuations persist.
Micron Technology at a turning point? This analysis reveals what investors need to know now.
The Broader Memory Squeeze
Micron sits at the center of a global memory shortage that is reshaping the entire AI sector. The scarcity has handed the company significant pricing power, with the average analyst recommendation now implying upside of more than 80%. Bank of America has added the stock to its list of top conviction ideas.
But it has not been smooth sailing. A consumer lawsuit alleging price-fixing has created legal uncertainty, and CEO Sanjay Mehrotra's recent sale of roughly $37.3 million in stock has given traders something to talk about. Meanwhile, Micron is lobbying in Washington to keep Apple away from Chinese memory suppliers CXMT and YMTC — a reminder of the geopolitical dimensions of the business.
The same memory shortage that is enriching Micron is squeezing others. Apple warned during its earnings call that it paid significantly more for memory chips in the quarter and expects further increases ahead. The company's stock fell 7.06% on Friday as investors digested the margin implications.
For Micron, the memory crunch cuts both ways. The company is the physical bottleneck of the AI infrastructure boom — the pricing power it now enjoys is the direct flip side of the same capex wave that is pressuring Apple's margins. The question for investors is whether the current record-setting performance can outlast the competitive and cyclical risks gathering on the horizon.
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