Micron Stock Drops 4% as Memory Selloff Deepens Even Though the Chip Shortage Keeps Fueling Booming Profits

Micron Technology shares fell about 4% on Friday, extending a slide in memory chip stocks as worries about the cost of the artificial intelligence buildout overshadowed the soaring prices and profits that have defined the industry this year.

Micron traded at $897 shortly before 10:45 a.m. EDT, down $37.27, or 4%. The decline followed a nearly 5% drop on Thursday.

Memory stocks extend losses

The selling hit the entire memory and storage group. Micron, Western Digital, Seagate and SK Hynix's U.S.-listed shares all fell, even after SanDisk reported quarterly revenue of $11.03 billion and beat earnings expectations. SanDisk shares dropped about 9% Friday.

The pressure extended to Asia. In South Korea, SK Hynix shares fell 7.08% and Samsung Electronics dropped 3.02% on Friday, with Samsung weighed down by lower-than-expected net profit.

Analysts said the weakness in SK Hynix and other memory names reflected broad market and thematic forces rather than problems at any single company.

AI spending doubts

The trigger was renewed concern about whether massive AI investments will pay off. Amazon reported a free cash outflow of $42.4 billion over the past 12 months, sparking fears that the AI spending boom may be nearing its limits.

Alphabet's shares tumbled more than 12% on Thursday after reporting a second consecutive quarter of negative free cash flow. Deteriorating cash flow at Alphabet, Amazon and Intel is fueling fears of investment cuts that could hurt chip demand.

Concerns have been building for weeks. Earlier this month, Gartner analysts estimated that more than $3.5 trillion in AI infrastructure spending "could be exposed to impairment" by the end of 2030.

A shortage that cuts both ways

The global memory shortage has been a boon for Micron, pushing up prices for its chips. But it is creating problems elsewhere.

Intel blamed the memory crunch for rising PC prices and squeezed technology budgets, and now expects the PC market to shrink 12% in 2026 and 10% in 2027. Intel shares fell more than 27% Friday.

That raises a question for investors: whether high memory prices will eventually choke off demand from PC and smartphone makers that buy Micron's chips.

Stocks lag profits

The disconnect between surging memory profits and falling share prices has drawn attention. Investor Chamath Palihapitiya questioned why memory stocks remain far below their highs despite booming earnings.

As of Thursday's close, Micron was 23% below its 2026 high and SanDisk was 43% below its peak.

Even so, Micron remains one of the year's best-performing large stocks. The shares are up more than 220% year to date and about 317% over the past year.

Oversupply worries

Some investors are looking further ahead. Concerns that memory makers could produce too much supply as early as 2029, as they expand capacity to meet AI demand, have also weighed on sentiment.

Memory has historically been a boom-and-bust business, and investors tend to be cautious about valuing companies on peak-cycle earnings.

Competition is another concern. Memory stocks fell earlier this month on worries about rising Chinese competition.

Broader market weakness

The broader market offered little support. The Nasdaq composite fell 2.2% and the S&P 500 dropped 1.1% shortly after the open.

What comes next

For Micron, the key questions are whether AI customers keep spending at the current pace and how long the memory shortage lasts. Amazon CEO Andy Jassy said the company expects to boost spending further in 2027, a potential positive for memory demand.

But if more tech giants pull back on capital spending to protect cash flow, memory makers could face a sharp reversal in pricing power.