Micron falls 7% as chip selloff deepens on AI spending worries

Semiconductor shares led a broad U.S. equity decline Tuesday, with the Philadelphia Semiconductor Index tumbling 4.98 percent as Micron Technology dropped 7 percent to close at $940.76. The Nasdaq Composite fell 1.33 percent, the S&P 500 lost 0.69 percent, and the Dow Jones Industrial Average slipped 0.22 percent.

"Treasury yields edged down but remained elevated, keeping investors on guard," Seo Jeong-hoon, an analyst at Samsung Securities, said. International oil prices were also slightly higher, reflecting tensions in the Middle East.

Memory-related stocks bore the brunt. Sandisk fell 9.01 percent, SK Hynix's American depositary receipts slid 9.20 percent, and the iShares MSCI South Korea ETF sank 8.13 percent. Seagate Technology, Marvell and Western Digital each dropped more than 7 percent. Micron's single-day turnover reached $35.3 billion, the largest of any U.S. stock. Energy led the 11 GICS sectors with a 1.79 percent gain, while information technology, industrials and materials lagged. Meta Platforms fell 4.45 percent, Nvidia lost 2.34 percent, and Apple rose 1.45 percent.

The selloff coincided with three drivers: the 30-year Treasury yield surging past 5.3 percent to a multi-year high, Brent crude climbing above $90 a barrel on Middle East tensions, and doubts over AI capital spending. The CME FedWatch Tool showed the market-implied probability of another rate hike before year-end climbing to nearly 70 percent. Micron's next support sits at the late-July low of $740, roughly 20 percent below current levels.

Yields and Oil Pressure High-Beta Tech

The 10-year Treasury yield climbed to near 4.75 percent, directly discounting tech stocks' forward valuation models and raising concerns that Microsoft, Meta and Google will face higher costs for large-scale bond financing to build AI data centers. Brent crude's move past $90 a barrel fueled secondary inflation fears, with the FedWatch tool showing rate-hike odds near 70 percent. Rising risk-free rates and financing costs dampen future budgets for computing power and memory procurement, a key demand driver for chipmakers.

Fundamentals Hold Even as Stock Slips

Despite the drop, Micron remains up more than 200 percent year-to-date and trades well below its 52-week high. The company posted record fiscal Q3 revenue of $41.46 billion and guided fiscal Q4 revenue to $50 billion, driven by AI demand and high-bandwidth memory HBM4 shipments now in volume production. Top institutions including Bridgewater and Duquesne Family Office disclosed tactical trims in recent holdings, prompting follow-on selling. Micron's forward price-to-earnings ratio sits near 21 times, and the stock's next test is whether demand sustains pricing that covers heavy manufacturing expansion costs.

This article is for informational purposes only and does not constitute investment advice.