AI stock round-up: Micron offers lower earnings setup, BofA sees positive AI visibility into 2028

Stocks tied to the AI rally are largely shedding weight on Tuesday, with the tech-heavy NASDAQ 100 down 2.6% at the time of writing. A major 10% sell-off in the South Korean KOSPI tied to memory chip mavens SK Hynix and Samsung Electronics spilled over into the US market.

Both companies' shares fell after a local report said SK Hynix is slowing the expansion of its AI memory chip (HBM) production to emphasize the cheaper DRAM components.

The two largest memory chip makers in the US, Sandisk (SNDK) and Micron (MU), have followed suit, trading 13% and 11% lower, respectively. The pullback is to be expected as the stocks had risen over 700% and 300%, respectively, year to date.

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Bucking the trend is SpaceX (SPCX), which has ditched three days of losses to rise 5% on Tuesday. The company is raising $20 billion in the bond market in order to support its xAI buildout.

Microsoft (MSFT) saw its shares rise 1.9% after it announced the completion of its newest Fairwater AI data center in Wisconsin. Construction on the $3+ billion data center was launched in 2024, and Microsoft will shift to building a second data center nearby to be completed by the end of 2028.

Alphabet (GOOGL) stock continues to trend slightly lower after Monday saw a 5% dip on news that a second top AI researcher was leaving the firm. Nobel Prize winner John Jumper said he was leaving Google DeepMind to join Anthropic. That announcement follows the departure of Noam Shazeer, who led the development of Gemini AI, for a new role at OpenAI.

Bank of America raised its price targets on Micron, Intel (INTC) and Arm Holdings (ARM) on Tuesday after saying that it had better visibility into 2028 AI capex.

"We tweak our CY27E [wafer fab equipment] higher by +4% to $190bn (+31% YoY) from $183bn (+27% YoY) prior while materially raising CY28E by 23% to $250bn (+32% YoY) from $203bn (+11% YoY) prior,” analysts led by Vivek Arya wrote in a note to clients. “Our new CY29/30E WFE forecasts are $268bn (+7% YoY)/$292bn (+9%).”

BofA raised its price target on Micron to $1,500; to $460 for Arm Holdings; and Intel to $160.

Nvida (NVDA) shares fell 3% on Tuesday after data from Ornn showed that rental prices for Nvidia's B200 compute cost peaked at $6.11 per hour on May 30 before declining to $4.22 by June 21. That's a 31% decline in just one month.

Micron is now offering a better setup for bulls as it prepares to release its earnings on Wednesday. Wall Street expects Micron to deliver fiscal third-quarter adjusted earnings per share (EPS) of $20.28 on revenue of $35.25 billion. That amounts to a 926% increase YoY on EPS and 279% YoY on revenue.