Washington’s Warning Clashes with Wall Street’s Optimism on Micron

Micron stock slips 4.75% as industry groups warn of memory chip shortages, while Morgan Stanley doubles price target to $1,050 on supply constraints.

Micron finds itself caught between two powerful forces this week: a chorus of real-economy industries urging the US government to address memory?chip shortages, and a Wall Street analyst who just more than doubled his price target on the stock. The tension is already showing in the share price, which slid 4.75% on Friday to €818.70 after closing at €859.50 the previous session.

The catalyst for the selloff was a letter sent on June 3 to Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick. A broad coalition — including the NCTA, the National Retail Federation, the Alliance for Automotive Innovation, and AdvaMed — described an “urgent imbalance” in the market for DRAM, NAND, and high?bandwidth memory. They warned that sustained price increases would hit US households and threaten critical supply chains across cars, medical devices, telecom infrastructure, and consumer electronics. For Micron, whose investment case has long rested on tight supply driving margins higher, the letter transforms a tailwind into a political risk.

Yet the same scarcity that worries Washington is what persuaded Morgan Stanley to raise its price objective from $520 to $1,050. Analyst Joseph Moore expects supply constraints to persist for another two to three years. DRAM prices have already jumped 40% in the quarter ending in May, and the bank forecasts another 15% gain in the August quarter, lifting 2027 earnings estimates by roughly 48%. A further lever comes from contract renegotiations for high?bandwidth memory due late next year. Morgan Stanley maintains its “Overweight” rating.

Insider trading activity has added another layer of complexity. CEO Sanjay Mehrotra sold 37,400 shares on May 29 at an average price of about $960, netting nearly $36 million. The sale ran through a pre?arranged trading plan set in January. Mehrotra still directly owns roughly 387,000 shares, worth more than $370 million based on the same price.

The short?term backdrop was further darkened by Broadcom’s quarterly update. Although the company beat overall estimates, its AI chip revenue forecast of $16 billion for the third quarter missed the $17.2 billion the market had pencilled in. The disappointment triggered a broad selloff in semiconductor names. Micron fell more than 7% intraday on Thursday before closing at €859.50. The stock’s relative strength index hit 70, a level many technicians consider overbought.

Micron’s underlying financials remain robust. For the second quarter of fiscal 2026, revenue reached $23.86 billion, with GAAP net income of $13.79 billion. On a non?GAAP basis, net income stood at $14.02 billion. Management has guided for third?quarter revenue of $33.5 billion, plus or minus $750 million. The company’s market capitalisation briefly surpassed $1 trillion in late May, while gross margins in the last reported quarter came in at 75%. Those numbers help explain why the share price is still 44.24% higher over the past 30 days and up 204.35% year?to?date — and a staggering 781.08% over the past 12 months.

But the rally has created a fragile setup. The stock now trades 12.78% below its 52?week high of €938.70, set on June 3 — the same day the industry letter was dispatched. Technically, the equity is 53.10% above its 50?day moving average and 162.92% above the 200?day line, while annualised 30?day volatility of 94.08% underscores the market’s jumpiness.

The next test comes on June 24, when Micron reports third?quarter results. Investors will be watching gross margins, HBM revenue trends, and any commentary on capacity allocation between AI clients and legacy industrial customers. The more political pressure mounts, the more likely the debate over new production capacity will start to drive the stock — a dynamic that could complicate the bullish narrative Wall Street currently favours.