Micron Plunges 5.9% Friday After Thursday's 18% Surge Amid Rate Hike Concerns and Profit-Taking

Micron (MU-US) stock declined on Friday (31st), even as Apple (AAPL-US) and Amazon (AMZN-US) earnings reaffirmed that artificial intelligence (AI) continues to drive strong memory demand. However, market concerns over potentially higher interest rates dampened investor optimism.

Micron's stock had surged 18% on Thursday and opened higher on Friday, but later turned negative, closing down 5.9% at $823.03 per share.

Three officials opposed to the Federal Reserve (Fed) holding rates steady elaborated on their support for rate hikes, raising market worries that further rate increases could suppress corporate and consumer spending, thereby impacting demand for Micron's products.

Micron also faced profit-taking pressure following Thursday’s sharp rally, especially as recent market skepticism about whether the memory sector boom can continue has heightened stock volatility.

Nonetheless, Apple CEO Tim Cook alleviated some market concerns during Thursday’s post-earnings call. He stated, "We expect memory costs to rise further in the quarter ending in September."

The Wall Street Journal (WSJ) reported last week that Apple is lobbying the Trump administration to allow its devices sold in markets outside the U.S. to use Chinese-made memory chips.

However, Cook only cautiously mentioned the possibility of adding other memory suppliers on Thursday, without indicating Apple plans to source Chinese-made memory chips for products sold in China. This suggests that market fears of Chinese memory chips flooding the market and hurting Micron remain a longer-term risk for now.

Meanwhile, continued increases in AI infrastructure spending are supporting memory demand: Amazon raised its capital expenditure forecast from $200 billion to $220 billion on Thursday, citing rising memory chip costs as one reason.

Wall Street currently expects Micron's profits to grow for at least the next three years as AI investments continue to boost demand. According to FactSet data, Micron's current forward P/E ratio is under 6x.