China's CXMT advance and comments from Broadcom's CEO rattled chip stocks, and investors are debating which concern matters more for Micron.
The chip selloff rolled into a second day on Tuesday, October 13. Micron (MU:NASDAQ) was down about 4.5% by 10 a.m. ET, after a 3.9% drop on Monday. Nvidia (NVDA:NASDAQ) and Broadcom (AVGO:NASDAQ) each slipped about 1% before the bell, Forbes reported. Asia took the worst of it overnight: SK Hynix fell 10.1% and Samsung 7.4%.
The stocks fell together, but for two different reasons.
**Two Fears Behind the Chip Selloff**
The first is China. Over the weekend in Shanghai, memory maker CXMT said it had made "key progress" on a denser DRAM cell design that Samsung and SK Hynix are also chasing, and that it plans a server-memory product built on it by the end of 2026, according to the South China Morning Post. Research firm TrendForce, cited by Forbes, estimates the design could pack 30% to 50% more memory into the same chip area.
The second came from inside the industry. Speaking in Singapore on Monday, Broadcom CEO Hock Tan said "a lot of investors have no clue what they are investing in," and compared AI investing to a casino. He also warned that access to capital could become the biggest constraint on AI growth.
**Micron's Margins Are the Target**
CXMT is aiming at the most profitable part of the memory market. TIKR's data shows Micron's gross margin climbing from 37.72% in the quarter ended May 2025 to 86.76% in the quarter ended September 2026, a 49-point jump in five quarters, driven by tight supply of AI server memory.
Margins that high depend on scarce supply, and a credible new supplier threatens pricing even before it ships. CXMT's first products may only partly use the new design, but its end-of-2026 target gives the market a date to worry about.
**Cheap on Paper, for a Reason**
Nvidia and Broadcom already trade near the bottom of their three-year ranges. Nvidia sits at 18.71x forward earnings, against a 30.41x average and a 17.51x low. Broadcom trades at 20.47x, against a 30.03x average and an 18.51x low.
Micron looks cheapest at 5.61x, though its three-year average is skewed by the losses of the 2023 memory downturn. That multiple suggests the market doesn't believe 86% gross margins will last.
**Why Micron Has More to Lose Than Nvidia**
The selloff treats these stocks as one trade. The data says they aren't.
Micron's risk is direct: its earnings sit on peak margins, and CXMT is going after exactly that product. Nvidia and Broadcom face Hock Tan's worry instead, which concerns how long customers can keep funding AI spending. Their multiples already price in a good part of that doubt, sitting a third or more below their three-year averages.