Micron (MU) Stock Faces Bombshell New Lawsuit

Micron Technology (NASDAQ:MU) designs and manufactures memory and storage chips, including DRAM and NAND flash used in everything from smartphones to AI data center servers. Shares fell 5.49% on July 2 to close at 975.56, extending a slide that began after a class action lawsuit accused Micron, Samsung, and SK Hynix of colluding to restrict memory chip supply and inflate prices.

At a Glance

• Price: 975.56, down 5.49% on the day
• 52 week range: 435.9 to 1255.0
• Market capitalization: 1.10 trillion
• P/E ratio: 21.78, EPS reflects trailing GAAP results
• Dividend yield: 0.06%, RSI at 48.57

The Lawsuit Behind the Selloff

The suit, Garciaguirre v. Samsung Electronics, was filed June 25 in the U.S. District Court for the Northern District of California and assigned to Judge Noel Wise. Seventeen plaintiffs, mostly individual consumers and small businesses, allege the three companies, which together control roughly 90% of global DRAM supply, coordinated cuts to older DDR3 and DDR4 production and redirected capacity toward higher margin AI memory known as high bandwidth memory. Plaintiffs claim the alleged coordination pushed prices up by as much as 700% since 2022. Micron has denied the allegations and says it competes vigorously and fairly within the law.

The timing stings. Micron touched an all time high of 1,255 the same day the suit was filed, just three days after reporting record fiscal third quarter results: revenue of 41.46 billion, up from 9.30 billion a year earlier, and GAAP net income of 28.24 billion, or 24.67 per share, according to an SEC filing. Since that peak, shares have fallen sharply, including a 10.57% single day drop on July 1 that erased 122.01 in value.

Valuation, Momentum and Yield at Micron

At 975.56, Micron trades at a P/E of 21.78, modest for a company that just posted GAAP EPS in the tens of dollars off surging AI memory demand. That multiple sits well below many AI-adjacent semiconductor peers, suggesting the market is still pricing in cyclicality risk inherent to DRAM and NAND markets rather than treating Micron as a structural AI winner. The 0.06% dividend yield is negligible and irrelevant to the investment thesis; this is a capital appreciation and cyclical earnings story, not an income one.

RSI at 48.57 sits almost exactly at neutral, reflecting a stock caught between two narratives after a violent five session repricing. The bull case rests on Micron's HBM leverage to AI infrastructure spending, record quarterly results, and a legal precedent: a nearly identical 2018 suit against the same three companies was dismissed in 2020. The bear case leans on history, Samsung and SK Hynix both pleaded guilty to criminal DRAM price fixing in the early 2000s and paid a combined 485 million in fines, meaning regulators and courts have treated this industry's competitive conduct skeptically before. Whether this suit survives a motion to dismiss, as its predecessor did, remains an open legal question rather than a settled one.