Micron Technology stock MU fell on Thursday as investors reassessed the outlook for artificial intelligence spending, even as Nvidia CEO Jensen Huang said memory demand was unlikely to ease and D.A. Davidson reiterated its bullish view on the chipmaker.
Micron shares dropped 5.5%, reversing a 2% gain in the previous session.
Other memory-related stocks also declined, with SK Hynix’s US-listed shares falling 6%, while SanDisk and Western Digital lost more than 8% and 7% respectively.
The market reaction came as Micron announced a new quarterly employee bonus programme tied to company performance, alongside additional compensation measures for workers in Taiwan following union pressure over the distribution of profits from the AI boom.
AI memory demand remains a key focus for investors
Huang told CNBC that a surplus of memory was unlikely by 2029, highlighting the continued importance of memory chips as AI systems become more advanced.
“One of the things that’s really great about memory is that you can always use more of it,” Huang said.
Memory chips are an important component of AI infrastructure, supporting systems that require greater memory capacity and bandwidth.
However, uncertainty about the sustainability of AI-related spending continues to weigh on semiconductor stocks.
D.A. Davidson managing director and technology research head Gil Luria maintained a positive outlook on Micron after attending a webcast focused on the company’s upcoming innovations and position in the memory market.
“We see Micron as having a leadership position in memory technology, with far wider moats than are implied by the current valuation,” Luria said in a note on Wednesday.
The firm reiterated its Buy rating and $3,000 price target.
With Micron closing near $914 on Wednesday, the target implied that the stock could more than triple.
“Memory is integral to the AI product,” Luria wrote, adding that greater memory content and bandwidth could allow AI systems to operate at a higher level.
D.A. Davidson also highlighted Micron’s position across three key memory technologies: dynamic random-access memory (DRAM), NAND and high-bandwidth memory (HBM).
Micron introduces quarterly employee performance payments
Separately, Micron said on Thursday it would introduce quarterly employee payments linked to company performance from fiscal 2027.
The scheme will supplement its existing annual incentive programme and apply to employees globally.
The quarterly bonus pool will be calculated using profit after tax minus projected capital spending for the following quarter, with fiscal 2026 serving as the baseline.
Half of the payment will be made in cash after results, while the remainder will be distributed in shares that vest after one year.
Micron did not disclose a fixed percentage of earnings allocated to employees or the total amount reserved for the programme.
The announcement followed an agreement reached on Wednesday with a union at the company’s larger Taichung operations in Taiwan.
Talks with a separate union in Taoyuan remained ongoing on Thursday.
The Taoyuan union has called for a transparent arrangement allocating 15% of Micron’s operating profit to employees worldwide.
It said workers should receive a greater share of the gains generated by AI demand.
Taiwan workers to receive additional benefits
Micron said it would continue discussions with the Taoyuan union while increasing the maximum payment available under its annual incentive plan.
In Taiwan, the company will raise employer retirement contributions to 10% from 8%, provide three additional paid days off, increase shift allowances and make structural salary adjustments.
From December 1, 2026, the monthly allowance for day-shift workers will increase to NT4,500(138) from NT1,500(46).
Micron said the Taiwan-specific changes were intended to strengthen its competitiveness in the local market.
The company’s approach differs from arrangements at South Korean rivals Samsung Electronics and SK Hynix.
SK Hynix has agreed to allocate 10% of annual operating profit to an employee bonus pool, while Samsung agreed to reserve 10.5% of its semiconductor division’s operating profit for special bonuses, subject to profitability targets.
Micron’s quarterly payments will also be affected by capital spending, potentially limiting bonuses while the company invests in expanding production capacity.
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