By Keith Speights – Mar 20, 2026 at 4:44AM EST
Key Points
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Micron’s post-earnings sell-off appears to be primarily a case of investors selling the news to lock in profits.
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However, some could be concerned about potential issues that could hurt Micron.
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If Micron’s CEO is right about AI becoming more memory-intensive, the stock should have more room to run.
Sell the news
Investors have many adages. I think the most relevant one for the market reaction to Micron’s Q2 update was, “Buy the rumor, sell the news.” Make no mistake, though: Micron’s news was spectacularly good.
The memory chipmaker’s revenue nearly tripled year over year and soared 75% quarter over quarter to $23.9 billion. Its earnings skyrocketed 8.7x year over year and 2.6x sequentially. Micron generated $6.9 billion in adjusted free cash flow, up from $857 million in the prior year period and $3.9 billion in the previous quarter.
Micron’s latest results set new all-time highs on nearly every key front. CEO Sanjay Mehrotra said that the company expects “significant records again in fiscal Q3.” The company’s guidance backed up his statement. Micron forecasts Q3 revenue of around $33.5 billion, a 41% increase from Q2. It projects adjusted earnings per will jump roughly 57% quarter over quarter.
Even with this astounding growth, Micron can’t keep up with demand. Mehrotra confirmed in the earnings call that the company is still only able to fulfill no more than two-thirds of the medium-term demand for some of its key customers.
Ordinarily, such a stellar update provides a tremendous catalyst for growth stocks (or any other kind of stocks, for that matter). However, Micron’s s had already risen by more than 60% year to date. Some investors seem to have taken advantage of the opportunity to lock in profits.
Expand
NASDAQ: MU
Micron Technology
Today’s Change
(-3.71%) $-17.14
Current Price
$444.59
Key Data Points
Market Cap
$500B
Day’s Range
$421.23 – $457.20
52wk Range
$61.54 – $471.34
Volume
2.9M
Avg Vol
36M
Gross Margin
69.65%
Dividend Yield
0.10%
Some areas of concern
However, other investors could have some concerns about Micron despite its fantastic Q2 results and bullish outlook. The most significant fear is that the current supply demand imbalance that is fueling the stock’s impressive gains could suddenly reverse and turn into a supply glut.
Micron ly added to these worries by its revised fiscal 2026 guidance. The company upped its capital expenditure forecast to over $25 billion from its previous guidance of $20 billion.
Furthermore, Micron projects fiscal 2027 will “step up meaningfully” to expand capacity for manufacturing high-bandwidth memory (HBM) and dynamic random-access memory (DRAM). Management is targeting construction-related investments of more than $10 billion year over year as it builds more manufacturing sites.
I suspect that the growing anxiety related to skyrocketing energy prices and the crisis in the Strait of Hormuz is also weighing on many investors’ minds. Micron doesn’t ship memory chips through the narrow passage. However, Qatar produces around one-third of the world’s helium, which is transported through the Strait of Hormuz. Helium is critical for cooling in Micron’s manufacturing facilities.
Buy the dip?
Should investors buy the dip ing Micron’s Q2 update? I think so.
To be sure, Micron is a cyclical stock. Eventually, the supply of memory will catch up with demand. However, I predict the laws of supply and demand will negatively impact Micron later rather than sooner. It’s striking to me that Micron recently signed its first five-year supply agreement. This indicates that at least one customer views the supply demand imbalance as a longer-term challenge rather than a short-term one.
Mehrotra said in the Q2 earnings call, “As AI evolves, we expect compute architectures to become more memory intensive.” He added, “AI has not just increased demand for memory; it has fundamentally recast memory as a defining strategic asset in the AI era.” If he’s right (and I think he is), Micron should have plenty of room to run.
Read Next
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About the Author
Keith Speights is a contributing Motley Fool healthcare analyst covering publicly traded companies across pharmaceuticals, biotechnology, medical devices, technology, and marijuana. Prior to The Motley Fool, Keith was CEO of Constant Care Technology, a healthcare technology company; vice president of American HealthTech, a healthcare software company; and a director of operations for Blue Cross Blue Shield of Mississippi, a health insurer. He holds a B.S. in Industrial Engineering from Mississippi State University.
Stocks Mentioned
Micron Technology
NASDAQ: MU
$444.59
(-3.71%)-$17.14
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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