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Micron Technology Inc. (MU) stock traded lower Tuesday as investors weighed rising competition from China, broader weakness in AI-linked semiconductor stocks, and growing caution around a memory trade that has delivered strong gains this year.
The stock fell about 3% in Tuesday premarket trading after dropping 3.9% Monday. Despite the pullback, the stock remains up almost 250% in 2026, supported by AI-driven memory demand.
China's ChangXin Memory Technologies recently reported progress on a new chip design that can pack more memory into a smaller space.
The development raised concerns that Chinese producers could eventually add supply and challenge the tight memory market that has supported pricing.
The pressure spread across the sector Monday. Micron erased about $52 billion in market value, while SK Hynix Inc. (SKHY) lost about $41.5 billion and Sandisk Corp. (SNDK) shed roughly $15 billion amid competition concerns from China.
UBP Senior Equity Advisor Vey-Sern Ling told CNBC on Monday that investors were "jittery and looking for excuses to take profit on AI-related stocks that have outperformed this year, especially memory stocks."
He added that Chinese memory producers could affect global supply over time, although they still face technology hurdles in advanced memory such as HBM.
Rayliant Global Advisors Chief Market Strategist Phillip Wool also told CNBC that CXMT's progress marked an important development but argued that the immediate competitive threat remained limited because the company has yet to demonstrate large-scale production.
"I read that more as a sign of how vulnerable AI sentiment is at this moment," Wool said.
Bearish positioning had already started building before Monday's selloff.
More than 180,000 puts traded in the VanEck Semiconductor ETF by midday Friday, compared with about 50,000 calls, CNBC reported.
Micron saw roughly $270 million in premium tied to likely put buying, according to SpotGamma, including deep in-the-money contracts expiring in June 2028.
Volland founder Jason DeLorenzo cautioned against reading too much into those transactions.
"Spreads have difficulty being categorized by midpoint analysis as well, because dealers are willing to take a haircut on one leg while getting a better premium with the other," DeLorenzo said.
Despite the selling pressure, D.A. Davidson Managing Director Gil Luria remains bullish and argues that AI has fundamentally changed the role of memory.
Luria recently raised his 12-month price forecast to $3,000 from $2,100, citing strong AI and memory demand.
"The more memory you put to a model, the better it works. The more memory, the faster the model works. The more memory, the bigger the context window," Luria said.
He expects more than half of Micron's products to eventually be sold through five-year agreements as Microsoft Corp. (MSFT), Amazon.com Inc. (AMZN) and Alphabet Inc. (GOOG) (GOOGL) design specific memory products into their data centers.
"The product is no longer a commodity, it's no longer sold like a commodity," Luria said.
Luria said Micron can resume share repurchases on Dec. 9 when restrictions on its buyback expire.
He noted that management has said it plans to direct 100% of excess cash flow toward opportunistic share repurchases.
MU Price Action: Micron Technology shares were down 2.47% at $964.64 during premarket trading on Tuesday, according to market data.
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