The Micron Conundrum: Record Revenue, Fully Booked HBM, Yet the Stock Is Down 32%

Micron posted record revenue and profits, yet shares fell 32% from highs amid overcapacity fears from China and an antitrust lawsuit. Analysts see 74% upside.

Micron Technology just delivered the strongest quarterly performance in its history — revenue of $41.46 billion, a gross margin of 84.6%, and a GAAP profit of $24.67 per share. The company has already sold out its entire production capacity for High Bandwidth Memory through 2026, locked in customers like Ford, General Motors and Hyundai with long-term take-or-pay contracts, and collected $22 billion in customer deposits and letters of credit. And yet the stock closed at €746.30 on Friday, down 32.39% from its June 25 record of €1,103.80.

The contradiction is stark. Over the past seven trading days, shares lost nearly 13%. The decline wiped out months of gains and pushed the stock almost 10% below its 50-day moving average of €826.82 — though it still trades 75% above the 200-day average of €425.05. The 14-day relative strength index sits at 40.9, near oversold territory, suggesting selling pressure may be exhausting itself. Analysts’ consensus price target of €1,299.51 implies a 74% upside from current levels, a gap that underscores how far market sentiment has diverged from the earnings narrative.

The fundamental case remains robust

Three numbers explain why the bulls haven't thrown in the towel. Revenue surged 345.7% year over year in the third fiscal quarter, beating analyst expectations by 17.6%. Gross margin jumped from 37.7% to 84.6% — a level unthinkable in the commodity DRAM cycles of the past. And the company has signed 16 so-called Strategic Customer Agreements covering fixed volumes from 2026 through 2030, with exit penalties that effectively lock in revenue.

The shift to HBM memory — the high-bandwidth chips powering Nvidia’s Blackwell and Vera Rubin GPUs — has transformed Micron from a cyclical commodity supplier into a bottleneck in the AI supply chain. IDC data shows Micron, Samsung and SK Hynix control more than 95% of global DRAM output, and all three have reallocated fab capacity toward HBM because revenue per wafer is three to five times higher than for standard DDR5. Micron has stated that tight supply conditions will persist beyond calendar 2026, a claim backed by the $700 billion in capital expenditure hyperscalers are expected to pour into AI infrastructure.

The forces pulling the stock down

So why is the market selling? The proximate trigger is a familiar specter from the memory industry’s past: overcapacity fears from China. ChangXin Memory Technologies is preparing an initial public offering worth $8.55 billion, signaling a potential flood of new supply. That, combined with Samsung and SK Hynix expanding their own production lines, has revived the old worry that the industry will repeat its boom-bust cycle.

Legal headwinds add to the uncertainty. On June 25, a lawsuit accused Micron, Samsung and SK Hynix of antitrust violations, alleging they deliberately shifted output to HBM memory to starve the standard DRAM market and drive up prices. The case is in its early stages, but it injects regulatory risk into a stock already trading on elevated expectations.

Then there is Michael Burry. The investor famous for betting against subprime mortgages before the 2008 crisis disclosed a short position on Micron opened at €1,051.87. His stated thesis: the rally reflected “AI hype and FOMO, not fundamentals.” In a stock that climbed 664% over the past twelve months and carries annualized volatility above 100%, a headline from a legendary bear is enough to trigger aggressive de-risking — no new negative data required.

A structural super-cycle or a pause before a correction?

The sell-off has knocked the stock 723% above its 52-week low of €90.64 from August 2025. Year to date, Micron still shows a gain of 196%. The market capitalization stands at roughly €971 billion. The question dividing investors is whether this 32% retreat represents a healthy reset in a multi-year structural upcycle or the first crack in a valuation built on unusually optimistic assumptions.

The evidence tilts toward the first interpretation. The $22 billion in customer deposits and letters of credit — including $18 billion in deposits and $4 billion in letters of credit — provide a cushion that no prior memory cycle ever produced. The long-term contracts with automakers and hyperscalers, combined with a sold-out HBM pipeline through 2026, insulate the company from a sudden demand collapse. And the RSI near oversold levels suggests the momentum-driven sell-off may be nearing exhaustion.

Yet the burden of proof now rests on Micron to show that this cycle is genuinely different. The antitrust case, the CXMT IPO, and the Burry short all feed a narrative that the easy money has been made. For the rest of 2026, the stock will oscillate between a record-breaking present and a market that has suddenly started to question how long it can last.