Micron Technology Inc.’s post-results selloff served as a stark reminder to global investors about the inherent risks in betting on artificial intelligence chipmakers. The memory chip maker’s shares plummeted by about 8% in extended trading after issuing a forecast that fell short of the most optimistic estimates, underscoring the volatility in the AI sector.

Days after leading AI chipmaker Nvidia Corp. experienced a massive slump, shedding nearly half a trillion dollars in market value, Micron’s dip further highlighted the precariousness of AI-related investments. Nvidia’s shares entered correction territory earlier this week before bouncing back, while a global gauge tracking semiconductor shares fell about 5% from an all-time high reached earlier this month. This trend underscores the heightened expectations placed on AI firms and the potential for rapid corrections.

Micron has benefited from the surge in interest in AI stocks, particularly due to its high-bandwidth memory, which is compatible with Nvidia’s industry-leading chips for training large language models. Its shares had more than doubled in the year prior to its Wednesday report. However, despite providing an outlook roughly in line with average analyst estimates, Micron was penalized for not exceeding the lofty expectations set by the market.

“The market is holding totally unrealistic expectations, as many names who are beating street estimates by a wide margin are still being sold down,” said Andrew Jackson, head of Japan equity strategy at Ortus Advisors Pte in Singapore. “But I think the street is very well aware of the fact that these US names are pretty overcooked. Too many paper hands chasing the fast easy money.”

The selloff also affected South Korea’s two biggest memory makers, Samsung Electronics Co. and SK Hynix Inc., although they managed to recoup their losses by Thursday’s close. These companies, which supply memory for PCs, smartphones, and conventional data center use, are still recovering from a slump last year, making their share prices more susceptible to fluctuations.

Micron’s outlook was notably less optimistic compared to SK Hynix, which announced that its high-bandwidth memory (HBM) production capacity is largely sold out through 2025, according to Tom Kang, director at Counterpoint Research. Micron lacks the dominant position in AI memory held by SK Hynix and the broader memory industry leadership of Samsung, he added.

“This brings a reality check to the AI sector, which looks bubblish,” Kang remarked. The disparity between market expectations and actual performance highlights the speculative nature of AI investments and the potential for abrupt market corrections.

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