Micron (MU) Delivers Strong Earnings, Massive Capital Expenditure Raises Market Concerns, Stock Falls Over 4%

Micron Technology, the largest American memory chip manufacturer, announced its latest quarterly financial results, exceeding market expectations for both revenue and profit outlooks. However, the company also revealed plans to significantly increase capital expenditures to meet the huge demand driven by artificial intelligence (AI), causing MU’s stock price to drop 4.6% after hours. Despite this, the stock has risen 56% so far this year, making it the best performer among the semi-index stocks.

Micron’s strong earnings report and massive capital spending weigh on MU stock

In the second quarter, Micron reported revenue of $23.9 billion and earnings per share of $12.20, beating market forecasts. For the third quarter, the company provided a strong outlook with revenue of $33.5 billion and EPS of $19.15. Despite the impressive financial results, Micron’s stock fell about 4.6% after the earnings release. The main reason is the unexpectedly high capital expenditure, which the company estimates will exceed $25 billion this year and over $10 billion more in 2027, reflecting the substantial costs of expanding capacity to handle surging orders.

However, Micron (MU) has still gained 56% year-to-date, making it the top-performing stock in the semi-index.

AI-driven HBM market boosts Micron’s gross margin to 74%

AI model training heavily relies on data transfer efficiency, making high-bandwidth memory (HBM) a core component. To meet the huge demand, major manufacturers like Micron are shifting production capacity toward more profitable HBM products. This capacity shift has led to supply constraints in traditional memory, pushing up market prices. Benefiting from an improved product mix, Micron’s gross margin has surged from 36.8% a year ago to 74.4%, up from 56% in the previous quarter.

Micron is actively expanding production of the new generation HBM4. The adoption rate of Micron’s products in Nvidia’s next-generation chips will be a key factor in determining its share of the AI supply chain.

Global memory shortage: Can Micron sustain its rally?

While memory shortages have benefited manufacturers’ profits, they have also burdened the broader tech industry. Supply chain bottlenecks not only increase procurement costs but also lower expected shipments of smartphones and PCs. For example, HP recently stated that memory prices have nearly doubled. SK Group Chairman Chey Tae-won said this week that due to inherent limitations in memory production, the global shortage could persist for four to five years.

(GTC 2026 | SK Group Chairman: Memory supply tightness to continue until 2030, TSMC a key partner)

As gross margins continue to rise, whether Micron’s stock can sustain its upward momentum remains a key concern for investors.

This article, “Micron (MU) Earnings Beat Expectations, Massive Capital Expenditure Sparks Market Concerns, Stock Drops Over 4%,” first appeared on Chain News ABMedia.