Samsung and SK Hynix volumes to flood in 2028... Micron's true stock price test looms

▲ Can Micron surpass Samsung Electronics and SK Hynix?/AI-generated image ©

Micron's stock, which is at the center of the artificial intelligence (AI) boom, breaking historical performance records, is sailing smoothly after a short-term correction. However, a warning has emerged that a real risk of collapse looms around 2028, when semiconductor oversupply is expected to intensify.

According to cryptocurrency media Watcher.Guru on September 3 (local time), Micron Technology (MU) stock price has fallen 23% from its recent high, but this is not due to a slowdown in demand. It is the result of a complex interplay of factors: a general pause in the semiconductor sector due to rising Treasury yields, concerns about a potential strike at Taiwan factories, and a reduction in holdings by Norges Bank, which manages Norway's sovereign wealth fund. As this adjustment occurred immediately after record quarterly results, there are no signs of a stock price crash due to weak demand yet.

Currently, Micron's performance indicators are very robust. Revenue for the quarter ended May surged from $9.3 billion in the same period last year to $41.4 billion, and revenue guidance for the quarter ending August is $50 billion. Gross Margin also soared to 85%. Sanjay Mehrotra, Micron's CEO, stated during the fiscal third-quarter earnings announcement that it is currently difficult to gauge when memory supply will be able to catch up with increasing demand.

Analysis from major customer Nvidia also points to the same trend. Colette Kress, Nvidia's CFO, tentatively projected revenue for fiscal year 2028 to increase by approximately 70% year-over-year, mentioning that supply shortages would persist as a bottleneck at least until the end of fiscal year 2028. However, around 2028, when new semiconductor factories (fabs) of Micron, SK Hynix, and Samsung Electronics begin mass production, the resolution of supply shortages could trigger significant price drops and stock price collapse pressure.

Micron closed at $956.08, up 2.43% from the previous trading day's closing price of $933.44, recording a market capitalization of $1.08 trillion. Wall Street's one-year target price is $1,513.11, still forecasting additional upside potential, and the current valuation is considered attractive if the projected operating profit of $200 billion next year, mentioned by some, is reflected. Accordingly, some analysts continue to raise their target prices.

However, the memory semiconductor industry experiences extreme performance volatility, as evidenced by Micron's gross margin recording negative 11% in fiscal year 2023. The target price presented at this point is closer to a bet on how long the supply shortage will last until new supply floods the market in 2028. While the immediate risk of a sharp decline based on current indicators is low, the sustainability of AI demand will be put to the test when large-scale expansion volumes enter the market in 2028, marking a true turning point.

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