Micron Technology shares dropped again on Thursday, continuing a selloff caused by three main pressures on the memory-chip company.
The stock fell about 3% in premarket trading, after dropping 8% the day before and 20% over the past month. This pullback comes after a nearly 700% surge in the last year, which has made investors nervous about a possible change in the market cycle.
The first pressure comes from Dutch equipment maker ASML Holding, which announced that its latest extreme ultraviolet lithography machines can make memory chips more efficiently. Micron’s Korean rivals, SK Hynix and Samsung Electronics, plan to use this new equipment, which could increase manufacturing across the industry. Any move that helps ease the current memory shortage has caught the market’s attention.
The second concern is about whether Big Tech companies will keep spending on artificial intelligence infrastructure, and if cloud providers might try to use less expensive memory. This worry grew this week after reports said that cloud-computing company CoreWeave has been looking into financial tools to protect itself if memory and storage prices fall in the future.
There is no sign that CoreWeave expects prices to drop, and most industry analysts still think memory costs will rise at least through 2027. Still, just the idea that companies are preparing for a possible price change was enough to make investors uneasy.
The third factor is leveraged exchange-traded funds linked to memory-chip stocks. These funds use options, swaps, and other financial tools to increase daily price swings, which can make losses bigger when stock prices fall.
Leveraged funds adjust their holdings every day to keep a set leverage ratio. When prices keep falling, losses add up faster than the stock’s actual decline. J.P. Morgan analysts said that assets in leveraged memory-stock ETFs have dropped by about a third since their peak in June, which is a bigger drop than in other leveraged-equity ETFs. The bank also noted that these funds are unusually large compared to the value of the memory stocks they track, which makes price swings even bigger.
Analysts say these pressures could go away quickly. If Big Tech reports strong earnings, it could calm worries about AI spending and chip demand, and leveraged positions could be reduced. For now, though, Micron is still facing pressure.
