Quick Overview
- Micron (MU) stock experienced a ~20% decline across five consecutive trading days following impressive Q2 financial performance
- The selloff was sparked by Google’s introduction of TurboQuant, a compression technology potentially reducing AI memory requirements by 6x
- Competitor SanDisk (SNDK) also suffered, dropping 11% following the same announcement
- Morgan Stanley’s Joseph Moore maintained his Buy recommendation, viewing the decline as an attractive entry point
- Analyst consensus remains at Strong Buy with an average target price of $536.55, suggesting ~51% potential gains
Micron Technology delivered unprecedented results for its fiscal second quarter, posting revenue growth exceeding 190% compared to the previous year, reaching $23 billion. The chipmaker simultaneously achieved all-time highs across multiple metrics including gross margin, per-share earnings, and free cash flow generation. Everything pointed to success.
But then Google entered the picture.
The tech giant announced TurboQuant, an innovative compression technology that Alphabet claims can slash memory requirements for operating large language models by as much as six times. This revelation triggered an immediate selloff across memory-focused semiconductor stocks.
SanDisk (SNDK) saw shares tumble 11% following the disclosure. Micron experienced an approximately 20% decline spanning just five trading days. Additional downward pressure emerged from investor concerns regarding the company’s substantial capital expenditure plans slated for fiscal 2027.
Even with outstanding quarterly performance, investor sentiment turned negative on worries that memory demand — representing Micron’s primary revenue driver — might face long-term structural challenges if artificial intelligence systems require significantly less memory capacity.
Morgan Stanley Offers Contrarian View
The bearish reaction hasn’t persuaded everyone. Five-star Morgan Stanley analyst Joseph Moore maintained his Buy recommendations on both Micron and SanDisk following the sharp declines.
Moore characterized the market reaction as “healthy pricing in of durability concerns” instead of evidence of fundamental business deterioration. He emphasized to investors that comparisons to previous memory industry downturns miss critical differences in the current environment.
Regarding TurboQuant specifically, Moore assessed it as an “evolutionary development, with basically no surprises for memory” after consulting with industry sources. His research indicates memory supply constraints are actually intensifying rather than loosening, with buyers prepaying for substantial volume commitments based on expectations of ongoing tight availability.
Based on present earnings capacity, Moore projects that Micron and SanDisk will produce annual cash flow equivalent to 15%-25% of their respective market capitalizations. His view is that this level of cash generation “is going to last for long enough to see the stocks move materially higher.”
The upcoming wave of AI expansion focuses on inference — the mechanism through which large language models process and respond to queries in real time. This workload operates continuously and demands consistent memory utilization, positioning Micron to benefit through its DRAM, NAND, and high bandwidth memory (HBM) product portfolio.
Current Valuation Analysis
Micron’s present valuation metrics have invited comparisons to the Magnificent Seven technology stocks. When evaluated on a forward price-to-earnings multiple, Micron appears more attractively priced than numerous AI-related companies, including Nvidia and Alphabet, which have also experienced recent declines.
The Street consensus reflects a Strong Buy rating, comprising 26 Buy recommendations against only two Hold ratings. The mean price objective of $536.55 indicates approximately 51% appreciation potential from present trading levels.
The shares remain elevated roughly 286% over the trailing twelve months, even accounting for the recent correction.
Micron’s 52-week trading band extends from $61.54 to $471.34, placing the current quotation of $355.62 substantially below recent peaks while remaining far above cyclical lows.
