- Micron blew past analyst expectations for its May quarter and projected above-consensus revenue and profit for the next quarter, sending shares up 14% in after-hours trading and boosting Nasdaq futures after a brutal two-day selloff in chip stocks.
- Micron touted four long-term supply agreements with “very large customers” at today’s elevated prices, and executives said they expected a memory supply crunch to persist beyond 2027 — directly countering the AI spending skepticism that drove this week’s selloff.
- Despite the after-hours surge, memory stocks still trade below 10x forward earnings because investors remain skeptical the AI-driven demand cycle will last — and the US semiconductor index recently traded 60%+ above its 200-day moving average, near dot-com-era extremes.
- Individual investors funneled a record $437 million into a 3x-leveraged bearish semiconductor ETF on Monday — then stocks plunged Tuesday — underscoring how retail leverage is amplifying sector swings in both directions.
What Happened?
Micron Technology reported blockbuster May-quarter results Wednesday evening, beating analyst expectations on revenue and profit and projecting the next quarter above Wall Street’s forecast. Shares surged 14% in after-hours trading, helping to lift Nasdaq futures and partially easing the panic from a two-day tech rout that had seen Micron shed 7.5%, Nvidia fall 5.5%, and Oracle slump 15%. The results were especially significant given the timing: they arrived in the middle of a global selloff that had taken South Korean chip giants SK Hynix and Samsung down 10%+ on fears that AI capex was running ahead of returns. Micron struck back with concrete evidence of demand: four long-term supply contracts with major customers locking in today’s high prices, and a management forecast that the memory supply crunch extends past 2027.
Why It Matters?
Micron’s results don’t fully resolve the AI spending debate — they address the demand side (memory is needed, customers are paying up) but not the ROI question (will AI applications generate enough revenue to justify the $741B in hyperscaler capex this year). The chip sector’s valuation picture is paradoxical: memory stocks have surged 900%-4,000% over the past 12 months yet still trade below 10x forward earnings — a sign the market is pricing in a cyclical bust even as fundamentals are booming. Goldman Sachs recently told clients: “With a lot of value already built in, markets are more vulnerable to news that challenges an optimistic view.” The semiconductor index trading 60%+ above its 200-day moving average — near 2000 dot-com levels — adds technical fragility to a fundamentally strong picture.
What’s Next?
Thursday’s PCE inflation print (consensus: 4.1% headline) is the next macro catalyst; a hot number would reinforce Fed rate-hike expectations and likely reignite the selloff. If bond yields continue falling — helped by the oil slump that drove a Treasury rally Wednesday — that mechanical relief could give tech stocks more room. Micron’s earnings set a high bar for the rest of the semiconductor earnings cycle. The deeper question, as LNW CIO Ron Albahary noted, is structural: the market is “highly dependent on a particular narrative” — and when that narrative faces any friction (rate hikes, AI ROI concerns, geopolitical disruption), trillion-dollar swings happen in single sessions. Volatility is the new normal.
Source: The Wall Street Journal
