Micron Technology shares slipped early Wednesday, even though SpaceX CEO Elon Musk shared a positive outlook on future memory prices.
Shares dropped 1.1% in premarket trading, giving back a bit of the previous day’s 7.6% jump. Over the past year, the stock has soared more than 700% as strong AI demand keeps boosting the memory chip market.
Micron and its South Korean competitors, SK Hynix and Samsung Electronics, are working to increase production. However, Musk said he does not expect demand to slow down soon. On SpaceX’s earnings call Tuesday night, he explained that memory output is rising about 20% each year, which is impressive for such a big industry. Still, he pointed out that demand could be growing by 200% a year or more, so supply will likely keep falling behind demand.
Many saw Musk’s comments as good news for both Micron and SK Hynix. Still, SK Hynix’s American depositary receipts dropped nearly 3% in premarket trading, even though J.P. Morgan repeated its positive view on the South Korean stock in a research note Wednesday.
J.P. Morgan said the focus for memory stocks is moving away from short-term earnings and toward how long the current demand can last. The firm added that clear plans for capital allocation will help rebuild investor confidence after the stock’s sharp drop from its June high.
J.P. Morgan suggested that SK Hynix might announce a share buyback in the next few months, calling it a possible key driver for the stock. Even though the firm slightly lowered its price target, SK Hynix’s shares in South Korea closed up 5.8% on Wednesday.
