Micron Technology, the US memory chip maker, saw its share price decline sharply in Wednesday trading, falling more than 4% to around $98. The drop came after a prominent Wall Street analyst downgraded the stock from 'buy' to 'neutral', citing a potential slowdown in demand for high-bandwidth memory chips used in artificial intelligence applications.
The downgrade reignited fears that the AI boom, which has driven a surge in semiconductor stocks over the past year, may be losing momentum. Analysts pointed to recent commentary from data centre operators suggesting a more cautious approach to capital expenditure in the second half of the year. This has raised questions about Micron's near-term revenue growth, particularly from its memory solutions division.
The sell-off also rippled across the Atlantic, hitting UK-listed technology and semiconductor-related stocks. Shares in Arm Holdings, the Cambridge-based chip designer, fell 1.8% in London trading, while other tech-focused funds and trusts tracking the sector also saw losses. The FTSE 100 edged down 0.3% on the day, partly dragged by weakness in the technology sector.
For UK investors, the move serves as a reminder of the volatility inherent in the AI chip market. Many British pension funds and retail investors hold exposure to US tech giants through tracker funds or actively managed portfolios. A sustained downturn in semiconductor stocks could weigh on overall portfolio returns, particularly for those heavily weighted towards growth equities.
Analysts at Barclays noted that while the long-term outlook for AI-driven chip demand remains positive, the market may be entering a 'digestion phase' where near-term expectations are tempered. 'We still see structural growth, but the easy money has been made in this cycle,' they wrote in a note to clients.