Why Is Micron Stock Falling? A New Warning Points to an Early Peak

Micron Technology stock dropped Thursday on weakness across the semiconductor sector. Investors are keeping a close eye on the memory-chip cycle because it could peak shortly.

Shares were down 7.7% at $996 on Thursday. The stock had gained 916% in the past year as of Wednesday’s close of trading.

The big question hanging over Micron and its South Korean peers SK Hynix and Samsung Electronics is how long prices for their hardware can keep climbing.

Wall Street analysts have generally pointed to mid-2027 as the earliest point that increased supply could make a dent in high demand driven by artificial intelligence.

But Raymond James analyst Karl Ackerman argues that prices could top out sooner than 12 months from now and that both dynamic random-access memory (DRAM) and NAND flash memory prices should start suffering back-to-back quarterly declines early next year.

“We expect DRAM and NAND average selling prices will peak in mid-CY26,” Ackerman wrote in a research note on Wednesday.

Pressure could come from both supply and demand. On the supply side, Ackerman noted Chinese companies ChangXin Memory Technologies and Yangtze Memory Technologies are ramping up production.

On the demand side, AI’s memory-chip needs are driving prices so high that other industries are beginning to reduce their consumption. Global smartphone shipments are forecast to fall about 14% this year, according to Counterpoint Research.

The situation is bad enough that nine U.S. trade associations sent an open letter to Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick on Wednesday, calling for measures to ease the memory-chip shortage.

“While recent developments in AI offer the promise of generational technological advances and are important for U.S. tech leadership, we must also ensure other key industries are not negatively impacted,” the letter read.

Put all together it sounds alarming—a peak in prices normally indicates the memory-chip industry is primed a downturn in its boom-and-bust cycle. But Ackerman notes that long-term pricing agreements should soften the effects this time and kept an Outperform rating on Micron shares.

Micron normally trades at a notably low forward price-to-earnings ratio because of the cyclical nature of the memory-chip industry. Its forward PE ratio has expanded to 11.7 times, according to FactSet, from 4.4 times as recently as April.

“We believe this multiple implies moderating contract ASP [average selling price] growth, margin degradation, and oversupply conditions looming in the next 1-2 years,” Ackerman wrote.