Micron (MU -3.43%) stock moved lower in Tuesday's trading -- a session that saw significant swings for major indexes. The company's share price fell 3.4% in the day's trading and had been down as much as 4.5% shortly after the market opened. Meanwhile, the S&P 500 (^GSPC 0.06%) rallied back from significant early sell-offs to end the day roughly in line with yesterday's close, and the Nasdaq Composite (^IXIC -0.39%) slipped 0.4%.
Micron faced selling action today following a Wall Street Journal report that said that the Stargate Project's $500 billion artificial intelligence (AI) infrastructure initiative had run into challenges. Even though the broader market saw recovery in the afternoon on news that the U.S. has reached a trade agreement with the Philippines, the memory chip specialist's valuation was kept in the red by the Stargate news.
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A slow start for Stargate could hurt Micron
In January, the CEOs of SoftBank, OpenAI, and Oracle announced the Stargate Project alongside President Trump at the White House. Stargate is a new joint investment venture between the three companies and MGX, and the partners plan on investing $500 billion to build data centers and other AI infrastructure across Trump's first term.
At the time of the announcement, Oracle CEO Larry Ellison said that 10 data centers were already under construction -- but the WSJ's report today suggested that only one small data center is expected to be built this year. Micron is expected to be a beneficiary of the big data center build-out and could see softer growth due to delays.
What's next for Micron?
Micron's high-bandwidth-memory (HBM) solutions have become central to the bullish valuation thesis for the stock. Its memory chips are used in Nvidia's graphics processing units (GPUs) and other data center hardware for AI. While delays for Stargate's data center build-outs shouldn't crush Micron's results, they could mean that growth winds up coming in significantly below previous expectations. Investors shouldn't panic just yet, but the Stargate situation is a significant one for Micron.
