Micron (NASDAQ: MU) stock has been dropping more or less steadily the past two weeks — ever since earnings, in fact. The shares paused their slide Friday — but then resumed falling again on Monday, and as of 11:50 a.m. ET are down another 5.6%.
The question is why — especially in light of the vote of support Micron got just this morning?
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In a note just covered on StreetInsider.com, Canadian bank RBC sings Micron’s praises, forecasting 50% growth in DRAM prices in Q2 2026, followed by continued growth through the third and fourth quarters, and indeed, into the second half of 2027. Micron’s ramping HBM4 production to capture the higher prices and turn them into revenue — and profit.
While RBC admits there’s some demand destruction in smartphones, it believes the accelerating demand for HBM in data centers will more than offset this and “help reduce DRAM industry cyclicality going forward.”
But here’s the thing: RBC could be right about demand cyclicality getting dampened. It’s probably wrong, though, that this will save Micron stock from remaining a cyclical stock.
We saw evidence of this in last week’s news that Alphabet (NASDAQ: GOOG) has new compression technology that shrinks memory size while increasing performance. This new Google tech didn’t just come out of the blue, though. Rather, this seems a direct response to Google seeing high demand for memory, but low supply, and working to find a creative solution to this bottleneck so so high prices don’t hinder its AI business.
As more companies seek out similar solutions — and Micron and its rivals increase production (and thus supply) to capture profits — HBM prices will inevitably fall. The cycle will trend down again, and Micron stock will go with it.
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