Micron Stock Drops Despite Record AI Growth; Is $725 the Next Big Test?

Micron Technology (NASDAQ: MU) was trading lower on Thursday as the rising competitiveness of the Chinese memory industry is pitted against yet another set of record financial results generated by AI. The stock price of semiconductor names in general has been coming down due to concerns over valuations and news of the progress made by Chinese memory manufacturers. But the company’s financial strength, bolstered by high demand for HBM products, record revenues and multiple long-term supply contracts has continued to support Micron’s shares. The company’s stock has fallen along with other AI-related companies in the semiconductor sector, but management still anticipates significant demand growth for its products.

Micron records fiscal 2026 Q3 earnings

The company reported record revenue and record operating cash flow for the fiscal third quarter of 2026, which ended 24 June. As AI continues to transform how systems operate, advanced memory products such as HBM, DRAM and enterprise products will be critical components for building AI infrastructure. Chief executive Sanjay Mehrotra noted that the company was pleased to see demand for several key products remain strong, exceeding supply.

The company’s financial results reflect the importance of advanced memory in the AI ecosystem, he added. The company’s record free cash flow allowed it to generate approximately $30.2 billion of cash, marketable investments and restricted cash, which will allow it to maintain a healthy capital position while investing in capacity expansion and returning value to shareholders.

Strategic agreements with hyperscalers enhance revenue predictability

Over the past few years, Micron has seen a growing number of its hyperscale cloud provider customers engage in strategic customer agreements (SCAs) with the company. Unlike the traditional memory market, where customers buy memory products at prices determined by current supply and demand conditions, SCAs provide a customer with long-term commitments and priority access to HBM and DRAM products.

Micron management has indicated that it expects the SCAs to result in increased revenue predictability, reduced revenue volatility and enhanced pricing power. Furthermore, the importance of securing memory supply has become even greater than negotiating lower prices.

Micron enters high-volume production of HBM4

High-bandwidth memory continues to serve as a major driver of growth for the company. Micron announced that the HBM4 product, based on its advanced 1-beta DRAM process technology, has entered high-volume production for its leading AI platform customer, and that qualification samples were provided to a second customer. Development of its HBM4E platform remains on track for commercial production in 2027.

In addition, the company has started qualification of 256GB DDR5 registered dual in-line memory modules (RDIMMs) for next-generation AI servers requiring very large memory. These products will also be used in future systems deployed by hyperscale cloud providers and enterprise data centres.

The company also noted that it continues to experience broad-based demand for its business. Growth across the cloud, enterprise data centre, mobile, client computing, automotive and embedded markets underscores the breadth of AI adoption. AI adoption is not restricted to just one end market.

China Competition: A Growing Concern

Although the current state of the demand seems very strong, the increasing competition from China’s domestic memory sector is becoming a matter of concern for investors. There have been recent reports of developments by ChangXin Memory Technologies (CXMT), which along with improvements in China’s domestic semiconductor manufacturing capabilities, may create additional capacity that could impact the global DRAM pricing environment.

Most industry participants feel that China’s producers are still concentrating on older technology generations, whereas Micron continues to maintain a clear advantage in high-end AI memory such as HBM, where there are much larger technological hurdles and even more limited supply. Micron also recently announced new partnerships with Anthropic, General Motors, and Bechtel, which bodes well for its long-term prospects in AI infrastructure, automotive semiconductors, and U.S.-based manufacturing.

Management is optimistic that this will continue through the fourth quarter, projecting that revenue and profitability will continue to increase sequentially due to continued demand for AI-related products exceeding supply.

Micron (MU) Technical Analysis – Fibonacci Support Becomes Key

Micron (MU) lost momentum after the price fell below the $803.31 support level and broke through the 50-period EMA ($902.30) and 200-period EMA ($899.37). Recent candles have shown large bearish bodies with little or no lower wick, suggesting that the selling is real, not due to profit taking.

This move also pushed MU below the 61.8% Fibonacci Retracement ($881.90), accelerating downside pressure and shifting focus to the 1.272 Fibonacci Extension ($747.34), which lines up with the next significant support area.

Momentum indicators remain negative. The Relative Strength Index (RSI) has dropped to about 26, putting the stock in oversold territory. Oversold conditions may trigger a short-term bounce but typically don’t signal the end of a downmove. Resistance is at $803.31, $881.90, $902.30, and $960.39. The first support level sits at $725.72, followed by $675.25, and $598.32.

Resistance: $803.31, $881.90, $902.30, $960.39

Support: $725.72, $675.25, $598.32

Micron Outlook

Micron continues to be one of the biggest long-term winners of the global AI infrastructure expansion. Despite the current slump in semiconductor stocks, strong earnings, HBM ramp-up, long-term customer contracts, and solid free cash flow generation bode well for the business. Technically, the short-term trend is still bearish. Micron needs to recover $803.31 to show that the selling momentum is abating.

Until then, the $725 support and the Fibonnaci Extension will remain the key areas to watch as investors determine whether China’s expanding memory industry can erode Micron’s lead in AI memory.

ABOUT THE AUTHOR See More

Arslan Ali Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Ali Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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