Why Micron Stock Is Falling Hard Today
Key Points
Investors are increasingly concerned about the high levels of AI spending.
Rising interest rates, higher-than-expected inflation, and concerns about scarce capital for AI investments are putting pressure on Micron today.
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Shares of Micron Technology (NASDAQ:MU), a leading semiconductor company, were tumbling today as investors continued to worry that a slowdown in artificial intelligence spending could be imminent.
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Recent comments made by Nvidia's CEO added to their concerns, as he said that available capital is scarce for more growth in the AI cloud market.
Shares of Micron stock were down by 5.2% as of 1:33 p.m. ET.
Image source: Getty Images.
AI spending continues to draw the ire of investors
Investors are growing increasingly concerned that the leading technology companies are spending too much money on artificial intelligence and not delivering sufficient sales and earnings.
For example, Meta stock is sliding today even though its top- and bottom-line results beat Wall Street's consensus estimates. Shareholders, instead, latched onto the fact that Meta will spend $135 billion to $145 billion in capital expenditures this year.
The skeptical sentiment Meta shareholders have is spilling over to the broader market and sending Micron's shares falling. Micron is a leading memory and storage provider for AI data centers, so any worry that companies are overspending means investors think a slowdown could be around the corner.
Making matters worse for Micron stock today was that CNBC reported that Nvidia CEO Jensen Huang said today that while there's lots of demand for AI data center infrastructure, capital is scarce.
That wasn't reassuring for Micron shareholders, considering the company relies on AI leaders to make significant investments in hardware and data centers.
Broader economic concerns are also affecting AI stocks
In addition to the questions surrounding AI spending, investors are concerned about rising economic pressures. The Federal Reserve recently raised interest rates and has hinted they may do so again soon.
Rising rates could put pressure on tech companies' spending as it makes borrowing more expensive. That's coming on top of rising oil prices from the U.S. war with Iran, and recent reports of inflation rising faster than expected.
When added altogether, AI stocks took the brunt of the sell-off sentiment and took Micron down with them.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.
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