Micron Shares Retreat as Investors Weigh Major Expansion Plans

Micron Technology's stock experienced a significant pullback in Monday's trading session, despite the company unveiling a multi-billion dollar acquisition and ambitious capacity expansion plans. The market's reaction highlights investor caution regarding the substantial capital outlays, lengthy timelines, and the stock's recent strong performance.

• Share price declined approximately 7.5% from Friday's close.
• Signed a letter of intent to acquire a PSMC fab in Taiwan for $1.8 billion in cash.
• Confirmed its entire High Bandwidth Memory (HBM) production for fiscal 2026 is already sold out.
• Commenced construction on a New York "megafab" complex with a total projected investment of $100 billion.
• Meaningful output from new capacity expansions is not expected until late 2027.

Strategic Moves: Acquisition and Long-Term Build-Out

Over the weekend, Micron confirmed a major strategic step in Asia, signing a letter of intent to purchase Powerchip Semiconductor Manufacturing Corporation's (PSMC) P5 fabrication facility in Tongluo, Taiwan. The all-cash transaction is valued at $1.8 billion.

This move provides Micron with an existing 300-mm cleanroom, saving the considerable time required for a greenfield construction project. However, the timeline remains extended. While the deal is slated to close in the second quarter of 2026, a material contribution to DRAM wafer output is not anticipated until the second half of 2027, due to extensive retooling for Micron's proprietary process technologies.

The site is strategically positioned to address soaring demand for both High Bandwidth Memory (HBM) and standard DRAM, specifically for AI data center infrastructure.

Supply Constraints and Revenue Implications

In tandem with the acquisition news, management reiterated the tight conditions in the global memory market. The company stated that its HBM supply for fiscal 2026 is effectively fully allocated, citing an unprecedented supply-demand imbalance.

While this environment strengthens pricing power, it also caps near-term revenue potential, as existing production lines are already operating at maximum capacity. Significant additional sales will only materialize once new manufacturing lines, like the P5 facility, come online.

Profit-Taking Follows Record Highs

Monday's decline contrasted sharply with the bullish momentum seen late last week. On Friday, shares surged to a high of $362.75, fueled in part by the official groundbreaking ceremony for the planned $100 billion semiconductor complex in Clay, New York. Touted as the largest semiconductor fabrication facility in U.S. history, the event was attended by key political and industry figures.

Should investors sell immediately? Or is it worth buying Micron?

The return to trading after the Martin Luther King Jr. holiday, however, saw a shift in sentiment. The price action suggests a classic "sell the news" dynamic, with investors locking in profits following the sharp rally to elevated levels.

Two primary factors are influencing this reassessment:

• Extended Timelines: The newly announced Taiwan fab acquisition does not alleviate current supply shortages in the short term. Meaningful additional DRAM capacity is only expected by late 2027.
• Valuation Reset: After peaking at $362.75, valuations were considered rich. The pullback to around $335 brings key metrics closer to historical averages. Analysts note that the forward price-to-earnings ratio, at approximately 11 times expected earnings, remains attractive relative to the company's growth prospects.

Sector Outlook and Technical Perspective

The semiconductor sector remains volatile amidst the widely discussed AI investment supercycle. Micron is now pursuing a dual-track expansion strategy: the megafab build in the United States and the acquired fab in Asia. This approach strengthens its long-term competitive positioning but also increases execution and cost-control challenges.

From a chart perspective, the $330 zone emerges as a near-term focal point for market technicians, who view it as a key support level. A sustained break below could signal a more extended consolidation phase, while holding above it would confirm the broader upward trend.

Critical factors for the stock in the coming months include:

• The finalization of the PSMC transaction in Q2 2026.
• Progress updates on integrating and retooling the Taiwan facility.
• The trajectory of profitability metrics, particularly gross margins, which are projected to reach about 67% in the current quarter.

Consequently, Micron's future valuation hinges significantly on its ability to maintain robust margins through this investment cycle and successfully bring its announced capacity expansions to market as scheduled.