TLDR
- Micron (MU) stock fell about 4% to $873.66 in early trading Thursday, extending a slide that began earlier this week.
- China’s CXMT is reportedly developing a new memory chip, which started the selling.
- Anthropic’s Q3 revenue growth reportedly slowed to almost 50% from 145%, adding to AI worries.
- The iShares Semiconductor ETF (SOXX) is on pace for its eighth straight decline.
- UBS says memory companies should start shareholder returns, and Micron’s buyback limit lifts Dec. 9.
Micron (MU) stock fell about 4% to $873.66 in early trading Thursday. The drop adds to a slide that began at the start of the week.
The selling started with news that China’s CXMT is developing a new memory chip. Fears about the wider AI trade then piled on.
Samsung Electronics and SK Hynix were hit harder in local trading. They dropped 9.5% and 11%, respectively.
Other chip names fell too. Intel was off about 5%, AMD about 4% and Nvidia about 3%, while Sandisk dropped 7%.
Anthropic Update Adds to AI Worries
Anthropic gave investors a private revenue update, according to the Financial Times. Third-quarter revenue reached $16.8 billion.
That is sequential growth of almost 50%. In the second quarter, growth was almost 145%.
D.A. Davidson analyst Gil Luria said the market appears to be reading the update as negative. He called that understandable, given how on edge the AI trade has been.
Luria also called the update “more mixed.” Anthropic reported positive cash flow in the third quarter.
SOXX is on pace for its eighth session of declines. It has lost about 12% over the last seven trading days.
That would be its longest losing streak in 11 years. Dow Jones Market Data tracked the last eight-session run back to then.
James Vrachas of Post Oak Group said chip stocks have priced in a lot of future growth. He told MarketWatch that a small shift in sentiment can move prices a lot.
He said investors should look at earnings forecasts, profitability, cash flow and AI spending commitments. Pressure on 10-year Treasury yields eased slightly Thursday, which Jefferies’ Jeffrey Favuzza tied to AI sentiment.
Memory Stocks Eye Buybacks
UBS analyst Nicolas Gaudois said memory stocks are down 19% from their September peak. That puts them almost back at the July low.
He wrote that the drop should push memory companies to start shareholder returns. A J.P. Morgan survey of more than 100 Asia investors found similar calls for action.
Micron is restricted from big buybacks under its 2024 Chips Act funding. That limit lifts on Dec. 9, and the company has raised its repurchase authorization to more than $35 billion.
UBS analyst Timothy Arcuri sees Micron buying back about $20 billion a quarter at first. He says that could rise to about $50 billion a quarter by the end of fiscal 2027.
Gaudois thinks CXMT’s new 4F2 design is likely still just a sample product this year. Jefferies analyst Edison Lee said CXMT’s yield and capacity are unknown, and equipment may limit output.
It is also unclear whether U.S. companies could get approval to buy CXMT memory. The Chinese company gives priority to domestic customers.
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