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.<\/p>\n
According to William Blair analyst Sebastien Naji, the market reaction is likely the result of fears that Micron won\u2019t be able to continue its torrid growth rate.<\/p>\n
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%.<\/p>\n
Wall Street was anticipating EPS of $9.00 on revenue of $19.7 billion year over year.<\/p>\n
Micron also said it expects Q3 revenue above analysts\u2019 estimates.<\/p>\n
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\u2019s 2026 estimates calendar 2026 estimate\u2014below its historical multiple.<\/p>\n
\u201cWe 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\u2019s earnings power,\u201d he added.<\/p>\n
BofA Global Research\u2019s Vivek Arya was also positive on Micron\u2019s results, raising the firm\u2019s price objective on the stock to $500 from $400. But, he also said that the company\u2019s gross margins could hit a peak in Q3.<\/p>\n
\u201c[Micron fiscal Q3 gross margin] guide of 81.0% could be near peak cycle, eventually stabilizing toward 60-70% historical high prior to AI,\u201d he wrote.<\/p>\n
The company posted gross margins of 74.9% in Q2.<\/p>\n
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).<\/p>\n
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.<\/p>\n
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%.<\/p>\n Prices on those products will also increase 17% and 13%, respectively, versus 2025 levels.<\/p>\n 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.<\/p>\n<\/p><\/div>\n Because HBM offers higher margins, memory makers are building more chips for data centers than for other electronics, increasing prices on consumer and enterprise devices.<\/p>\n Micron, in particular, made a strategic move to discontinue its Crucial line of consumer memory products in favor of focusing on HBM chips.<\/p>\n On Monday, Micron announced plans to build a second plant at a site it acquired in Taiwan in January.<\/p>\n And in January, the company broke ground on a new $100 billion mega fabrication facility to produce memory chips in New York state to increase memory supply.<\/p>\n Micron stock has benefited handsomely from the AI boost, climbing 357% over the past 12 months and 63% since the start of 2026.<\/p>\n Meanwhile, Sandisk (SNDK), which focuses on storage chips, has seen its stock rocket 1,239% over the past year, driven by high demand from data center builders.<\/p>\n Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at <\/em>@DanielHowley<\/em><\/a>.<\/em><\/p>\n Click here for the latest technology news that will impact the stock market<\/strong><\/p>\n Read the latest financial and business news from Yahoo Finance<\/strong><\/p>\n<\/p><\/div>\n![\"Micron](\"https:\/\/s.yimg.com\/ny\/api\/res\/1.2\/_UJeUGPpNapPFAwngb5yNQ--\/YXBwaWQ9aGlnaGxhbmRlcjt3PTk2MDtoPTYyOQ--\/https:\/\/media-mbst-pub-ue1.s3.amazonaws.com\/creatr-uploaded-images\/2026-01\/a1b02b20-f7af-11f0-bdef-d62bfda39c11\")
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