Micron Technology dropped sharply in premarket trading on Tuesday. The decline came as Asian memory-chip stocks sold off, even though Micron announced a new long-term customer deal with Ford Motor.
Micron shares fell 6.0% to $925.61 in premarket trading. The drop followed big losses for South Korean companies. Samsung Electronics fell 6.9% after posting a 19-fold jump in operating profit for the June quarter. SK Hynix, another memory-chip maker, dropped 6.1% as it gets ready to list American depositary receipts on the Nasdaq this Friday. The offering is expected to raise $28 billion.
Analysts said the drop was likely due to profit-taking, not a major change in outlook. Strategists at Saxo Bank pointed out that investors were moving out of technology stocks after Monday’s rebound, as the Asian chip selloff brought back worries about AI-related valuations.
Even with the one-day drop, signs show that Micron is locking in higher chip prices for the future. On Monday, the company announced a strategic customer deal with Ford Motor. This is one of sixteen long-term supply agreements Micron has secured, which together guarantee about $100 billion in revenue. These deals help calm worries that the current high prices and profits in the memory-chip sector might not last.
Some market watchers believe Micron shares could still rise further. They point to strong memory demand from artificial intelligence infrastructure, which could help the company move past its usual boom-and-bust cycle.
