Understanding the Risks of Overvalued AI Expectations: Micron's Recent Selloff Sheds Light
Money | June 26, 2024, 11:44 p.m.
Micron Technology Inc.'s recent post-results selloff, following Nvidia Corp.'s slump, is a stark warning to global investors about the risks inherent in AI chipmaker investments. As Micron shares fell 8% after a forecast that missed estimates, South Korea's Samsung Electronics and SK Hynix also saw declines. The extreme volatility in AI-related stocks reflects unrealistic market expectations as companies like Micron struggle to meet elevated demands. While Micron has benefitted from the AI frenzy, its traditional memory supply business still faces uncertainty. The global semiconductors market has also felt the impact of recent corrections, signaling a reality check for the AI sector. With US megacap valuations reaching historic highs, investors must tread carefully in the AI space, as companies like Micron grapple with market pressures.