Micron (MU) stock fell more than 4% in early trading Thursday, despite posting better-than-anticipated second quarter earnings after the bell on Wednesday. The company also provided strong guidance for the current quarter, topping Wall Street estimates.
According to William Blair analyst Sebastien Naji, the market reaction is likely the result of fears that Micron won’t be able to continue its torrid growth rate.
Micron stock is up more than 342% over the last 12 months and 58% year-to-date. For Q2, the company reported earnings per share (EPS) of $12.20 on revenue of $23.86 billion. That amounts to an EPS increase of 682% year-over-year and a revenue jump of 196%.
Wall Street was anticipating EPS of $9.00 on revenue of $19.7 billion year over year.
Micron also said it expects Q3 revenue above analysts’ estimates.
Despite the initial market reaction, Naji, in a note to investors, wrote that Micron stock is trading at a price-to-earnings multiple of 6 times William Blair’s 2026 estimates calendar 2026 estimate—below its historical multiple.
“We continue to view Micron as a core beneficiary of the AI supercycle as memory accounts for a growing share of the total server bill-of-materials, bolstering Micron’s earnings power,” he added.
BofA Global Research’s Vivek Arya was also positive on Micron’s results, raising the firm’s price objective on the stock to $500 from $400. But, he also said that the company’s gross margins could hit a peak in Q3.
“[Micron fiscal Q3 gross margin] guide of 81.0% could be near peak cycle, eventually stabilizing toward 60-70% historical high prior to AI,” he wrote.
The company posted gross margins of 74.9% in Q2.
The AI market continues to drive massive demand for memory chips around the world. Memory, or RAM, is an integral component of data center servers for both GPU-based systems by Nvidia (NVDA) and CPU-based systems by the likes of Intel (INTC) and Advanced Micro Devices (AMD).
The explosion in AI training and inferencing and the broader push into agentic AI are driving a shortage of memory supplies, raising prices and impacting the cost of consumer and enterprise electronics.
In February, market research firm Gartner said the memory shortage will cause PC shipments to drop 10.4% in 2026 and smartphone shipments to decline 8.4%.
Prices on those products will also increase 17% and 13%, respectively, versus 2025 levels.
Micron is one of a small number of global memory chip suppliers, alongside SK Hynix and Samsung (005930.KS). Those companies produce DRAM, which is used as part of the high-bandwidth memory (HBM) necessary for AI data centers, as well as in double data rate (DDR) memory, which is used in various permutations in smartphones, laptops, and most other computers.
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