Micron Technology Inc. (MU) remains exposed to shifting sentiment across the memory sector as investors weigh recent stock weakness against strong AI-driven demand for memory and storage.
The stock is trading lower by almost 4% on Thursday, extending a multi-session slide driven by intensifying Chinese competition in high-margin server memory and broader profit-taking amid cooling AI sector sentiment.
Broader market pressure added to the selloff. U.S. stock futures were mixed Thursday, while escalating Middle East tensions and a sharp decline in Asian chip stocks weighed on investor sentiment.
Meanwhile, hotter-than-expected U.S. inflation fueled concerns about further Federal Reserve rate hikes, raising questions about financing AI infrastructure investments.
Rival memory and storage players SK hynix Inc., Western Digital Corp. (WDC), Seagate Technology Holdings Plc. (STX) and Sandisk Corp. also joined the Thursday selloff.
Newman Sees Memory Pullback As an Entry Point
Bernstein analyst Mark Newman said recent weakness across memory stocks has created a more attractive setup for investors.
“There’s still a lot of opportunity there,” Newman told CNBC on Wednesday, adding that memory and semiconductor stocks “look quite attractive” after their recent selloff.
Newman said memory stocks have pulled back partly because investors are no longer seeing an acceleration in memory price increases.
That contrasts with hard disk drives, where he expects pricing gains to continue accelerating over the next five quarters.
AI Keeps Memory and Storage Demand Strong
Newman said artificial intelligence remains a major structural demand driver for the memory and storage industry.
“Look, in AI, the core of AI is data,” Newman said.
He said AI workloads require data to move through the full storage hierarchy, including DRAM, NAND, hard disk drives and even tape.
Newman described demand across those categories as “extremely strong,” saying DRAM, NAND and hard drives are effectively sold out in some areas.
The tight supply environment has even pushed some customers toward tape storage because they cannot secure enough NAND or hard-drive capacity.
That backdrop supports memory suppliers such as Micron, which participates in both DRAM and NAND markets.
Pricing Momentum Varies Across the Industry
Newman drew an important distinction between memory chips and hard drives.
Memory companies are still benefiting from strong demand, but pricing increases are no longer accelerating at the same pace.
By contrast, hard-drive vendors already have orders and pricing visibility extending roughly five quarters, which Newman expects to support earnings growth.
He also identified Seagate as his preferred hard-drive name and said Western Digital faces technology risks as it works to catch up in next-generation hard drives.
Sethi Warns Against Overconcentration
DCVC Managing Partner Sarat Sethi took a broader view of semiconductor and technology investing.
He told CNBC that investors can own leading names such as NVIDIA Corp. (NVDA), Broadcom Inc. (AVGO) and Apple Inc. (AAPL), but warned against becoming overly concentrated in momentum or mega-cap technology stocks.
Sethi said successful investing still requires stock selection, diversification and knowing when to sell.
His comments point to a broader challenge for investors considering Micron and other semiconductor stocks: strong AI-related fundamentals can support long-term demand, but heavy concentration in a single theme can increase portfolio risk when valuations or momentum reverse.
MU Price Action: Micron Technology shares were down 3.92% at $878.28 during premarket trading on Thursday, according to market data.
