Micron stock falls after Google's TurboQuant AI algorithm; memory bottleneck persists

Over the past few months, Micron (MU) has been among the stronger investment options, with its stock rising sharply as memory chips faced a major bottleneck that pushed memory prices higher. The price pressure extended beyond enterprise and into consumer markets, where PC memory prices also jumped quickly.

Over the past year, the company’s stock is up around 300%, though it has since sold off. The shares are down more than 20% from their all-time high, and several factors are cited for the recent weakness.

Google’s TurboQuant algorithm and the market reaction

Alphabet’s Google recently unveiled a new algorithm called TurboQuant. The key takeaway highlighted in the article is that the approach reduces the memory size needed by six times. The market initially interpreted this as implying a need for six times fewer memory chips, contributing to the stock’s decline.

The article argues that the implication is overstated. It says that while AI hyperscalers may be able to use less memory for certain tasks, they are unlikely to reduce overall memory purchases proportionally. Instead, the freed capacity could be redirected to other uses, such as improving an AI model’s ability to recall specific inputs later—described as a “needle-in-a-haystack” task.

It also notes that Google did not restrict TurboQuant behind a paywall or limit it to its own ecosystem, describing it as open source. However, the article maintains that this is not expected to eliminate the broader memory bottleneck because demand still exceeds supply.

HBM demand growth versus Micron’s ability to supply

The article points to high-bandwidth memory (HBM) as a central driver. Micron estimated that the HBM market was worth about $35 billion in 2025, and expected it to triple to $100 billion by 2028.

Despite that growth outlook, Micron is described as struggling to meet demand today. During its most recent quarterly call, management told investors the company can meet only about half to two-thirds of its orders.

While the article suggests TurboQuant could provide temporary relief for some memory orders, it argues the underlying supply-demand imbalance is not expected to disappear.

Company outlook and near-term revenue expectations

The article includes Micron’s expectations for revenue next quarter: $33.5 billion, compared with $23.9 billion in the prior quarter and $13.6 billion in the quarter before that.

Impact on memory pricing and investment view

With HBM demand projected to expand through 2028 and Micron not meeting demand even now, the article concludes that memory chip prices are likely to remain elevated for the foreseeable future.

It also cites valuation as part of the investment case, noting Micron is trading at 6.2 times forward earnings. The article characterizes this as an opportunity to invest in the AI supply chain without buying other names that have performed strongly over the past three years.