Updates shares
By Kritika Lamba and Joel Jose
March 19 (Reuters) - Micron MU.O shares fell about 5% on Thursday as the chipmaker's plan to boost capital outlay unnerved investors, taking the shine off another round of blockbuster quarterly earnings fueled by AI.
Demand for advanced memory chips has soared as U.S. tech giants pour billions into AI data‑center buildouts, driving a supply crunch and pushing prices higher. That helped Micron deliver record margins in the quarter ended February.
But the company plans to increase its fiscal 2026 capital expenditure plan by $5 billion to meet booming demand, taking the total investment for the year to more than $25 billion and said spending would rise further in 2027.
The increased expenditure reflects higher spending on controlled manufacturing spaces and increased outlays for new production equipment as the company prepares for high-volume manufacturing and dynamic random‑access memory investments.
Most of the spending increase comes from expansion work at its site in Tongluo, Taiwan, with additional cost pressure arising from higher construction spending at its U.S. fabrication projects.
Construction-related spending is set to rise by more than $10 billion from a year earlier, the company said.
"Micron increased its capex forecast to continue to add production capacity. That reinforces the belief that the memory shortage is a temporary phenomenon and business will return to its commodity nature in coming years as capacity comes online," said Mike O'Rourke, chief market strategist at JonesTrading.
The chipmaker topped Wall Street expectations for the second quarter and forecast third-quarter revenue of $33.5 billion, plus or minus $750 million, compared with analysts' average estimate of $24.29 billion according to data compiled by LSEG.
Micron, whose shares have climbed more than 61% this year after surging over 240% in 2025, is one of only three global suppliers of high-bandwidth memory used in AI systems, along with South Korea's Samsung 005930.KS and SK Hynix 000660.KS.
Shares of other U.S. memory makers such as Western Digital WDC.O and Sandisk SNDK.O fell about 2% and 1%, respectively.
(Reporting by Kritika Lamba and Joel Jose in Bengaluru; Additional reporting by Shashwat Chauhan in Bengaluru; Editing by Krishna Chandra Eluri)
((JoelJose@thomsonreuters.com;))