A Chinese chip maker told investors its sales grew more than eightfold. On the next trading day, its stock fell nearly 8%. The numbers were great. Buyers still didn't want to pay more for them.
The company is CXMT, China's big maker of DRAM, the memory chips that work beside the processor in computers and AI servers. Sherry Qin reports it in Tuesday's Journal. In a late Friday filing, CXMT said it expects revenue of 265 billion to 270 billion yuan for the first nine months of 2026. That is about $40 billion, up from 32.08 billion yuan a year earlier. Net profit likely came in at 131 billion to 132.5 billion yuan. A year ago the company lost 5.3 billion yuan. The driver is AI. AI companies are rushing to lock up high-bandwidth memory for data centers. That squeezes the supply of ordinary DRAM and pushes up its price. CXMT said its chips are scarce and prices are up sharply.
The chairman even proposed a buyback of one billion to two billion yuan over the next 12 months. The plan still needs board approval. None of it helped. Shanghai-listed shares tumbled nearly 8% on Monday, Oct. 19. The Journal's read is that CoreWeave's share and bond selloff put credit risk in focus across the AI supply chain. Memory makers had been trading near peak valuations, so they had further to fall.
Why this matters to Micron
Micron (MU) is the big U.S. maker in this business, and we hold it. Micron fell 11% the week before, by Monday's Streetwise column, then rose 3% on Monday. We look at CXMT only as competition. A Chinese DRAM maker that can book roughly $40 billion in nine months is a serious rival. Shortages end. When they do, the supplier with the lowest costs and the most new capacity tends to win share. We don't know when that turn comes, and neither does anyone else. We only know memory has been a boom-and-bust business before.
Our read
This is an Investments/Risk IN04 story. When a whole sector trades at peak valuations, even great numbers can sell off, because the price already assumed them. Micron is held at weight in 23 books. The North Star books took a small Micron slice, to 1%, on Saturday, Oct. 17. That was the desk's decision for its model books, not advice, and nothing else changed. We report CXMT as competition, and we make no forecast about either stock. Our verdict is watch.
Here's the connection to your own account. If you own a chip ETF or a tech fund in your 401(k), the memory names inside it may have grown well past the weight you meant to hold. Open the fund's holdings this week and find Micron, Samsung and SK Hynix. Then compare the whole position with the number you wrote down when you bought it. If it has grown past that number, trimming back is the plan working, not a prediction. You trim the hedge in good weather, before the wind decides for you. If you never wrote a number down, a review is a good place to start.