Micron Technology has initiated volume production of its next-generation HBM4 memory, a critical component designed for Nvidia's upcoming "Vera Rubin" AI platform. This milestone, however, has done little to alleviate pressure on the company's shares, which have declined approximately 15% over the past week.

Stellar Earnings Met with Share Price Decline

The company's financial performance for its second fiscal quarter of 2026 was undeniably strong. Revenue reached $23.86 billion, representing a staggering 196% increase year-over-year. Adjusted earnings per share came in at $12.20, significantly surpassing Wall Street's expectations. Furthermore, Micron's board authorized a 30% increase in the quarterly dividend to $0.15 per share.

Despite these robust results, the stock retreated following the earnings release. Market strategists point to a sector rotation into GPU-focused semiconductor equities and mounting apprehension regarding emerging model compression technologies. A key concern is Google's internally developed "TurboQuant" algorithm, which purportedly compresses AI models to reduce memory requirements by up to sixfold without sacrificing performance. Should this technology prove commercially viable, the structural long-term demand for DRAM and high-bandwidth memory (HBM) could be materially lower than current projections.

Capex Surge and a Supply Lag

Should investors sell immediately? Or is it worth buying Micron?

In response to the explosive demand from artificial intelligence, Micron is deploying massive capital investments. The firm has raised its capital expenditure budget for fiscal 2026 to over $25 billion, up from a prior plan of $20 billion. These funds are allocated for a new chip fabrication plant in Taiwan and the expansion of existing facilities in Idaho and New York.

Company executives emphasized that the supply of AI memory will remain extremely tight through the end of 2026. However, the new capacity from these ongoing construction projects will not contribute meaningfully to global supply until fiscal 2028. Until then, the market must rely on existing production efficiency and the newly launched HBM4. Micron claims this new generation offers data transfer rates exceeding 2.8 TB/s while improving energy efficiency by 20% compared to its predecessor.

A central question now occupying analysts is whether current gross margins, approaching 80%, represent a cyclical peak. While Micron is delivering on its manufacturing roadmap, the market environment over the coming quarters will ultimately provide the answer.

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