Nvidia's Artificial Intelligence (AI) Chips Still Need Memory. Here's Why the Micron Sell-Off Has Gone Too Far.

By Adam Spatacco – Apr 7, 2026 at 5:03PM ESTKey PointsOver the last year, growth investors boosted Micron stock for its leading role in supplying high-bandwidth memory to AI hyperscalers.Google TurboQuant is a compression algorithm that reduces the amount of memory AI models require. While TurboQuant appears as an existential threat to Micron, smart investors understand the bearish narrative is overly dramatic. In late March, Alphabet unveiled a new software product called TurboQuant. At a high level, TurboQuant dramatically compresses memory footprints in large language models during inference. It didn't take long for headlines to circulate and cause shares of Micron Technology (MU 0.18%) to plunge. In large part, the sell-off was tied to Micron's relationship with Nvidia (NVDA +0.07%) since its high-bandwidth memory (HBM) solutions help power Nvidia's graphics processing units (GPUs). Data by YCharts. While the perception around Micron's vulnerability was understandable, I think the panic-selling was premature. Nvidia's artificial intelligence (AI) chips still require massive amounts of specialized memory, and TurboQuant does very little to change Micron's position in the equation. Image source: Micron Technology. What is causing Micron stock to plummet? AI models are used to store long conversations and process extended inputs to perform complex tasks. Behind the scenes, enormous volumes of memory and storage sit atop the GPUs actually processing these applications. At its core, the TurboQuant algorithm minimizes the space required to store memory while also preserving model accuracy. To the casual observer, TurboQuant looks like a software shortcut that allows AI to run on less silicon. Hence, memory stocks across the board cratered on the narrative that future AI workloads will need fewer chips. If the AI hardware supercycle that once fueled Micron's ascent suddenly crests and recedes, demand from the company's marquee customer, Nvidia, could vanish. Micron's DRAM chips play a critical role in Nvidia's AI ecosystem The underlying physics of AI chips tells a different story from the doomsday narrative above. Nvidia's GPUs are not designed as self-contained calculators. Rather, these compute chipsets are tightly integrated with external memory systems. The chipset itself contains a limited amount of on-chip memory capable of delivering low-latency access. Nvidia needs to complement its GPU core with HBM and stacked dynamic random-access memory (DRAM) layers in order to process and hold the growing number of terabytes required for today's models. While TurboQuant reduces the amount of working memory (RAM/VRAM) required during operation, it does not make the AI model itself smaller. In turn, the software doesn't completely eliminate the need for rapid, seamless data transfer between different parameters and their underlying compute networks. What investors are overlooking is that an algorithm like TurboQuant might actually enable larger effective contexts or higher throughput on the same baseload hardware -- subsequently driving more intensive workloads. Nvidia's latest chip architectures -- Blackwell and Vera Rubin -- were designed with the idea of ever-larger HBM stacks precisely because memory bandwidth is becoming a bottleneck on the heels of surging capacity demand. In essence, Micron's DRAM is not a simple commodity bolted on to Nvidia's chips. Rather, HBM is the lifeblood that delivers the power of a GPU as advertised. Reality check: Nvidia isn't going to ditch Micron As one of the largest suppliers of HBM, Micron has spent years engineering memory solutions that meet the exact power, thermal, and signaling specifications of Nvidia's silicon. Switching suppliers is more than just a procurement decision. Such action requires years of quality assurance testing, yield ramping, and system-level integration. Nvidia simply cannot afford to mortgage its data center empire for an unproven alternative while its roadmap is already supported by a predictable high-volume supplier like Micron. ExpandNASDAQ: MUMicron TechnologyToday's Change(-0.18%) $-0.70Current Price$377.06Key Data PointsMarket Cap$426BDay's Range$364.10 - $379.1052wk Range$63.52 - $471.34Volume1.1MAvg Vol41MGross Margin58.54%Dividend Yield0.13% Moreover, TurboQuant is really just a software optimization layered on top of existing hardware. In other words, the product does not really introduce a direct competitor to incumbent memory technology. Instead of cannibalizing demand, efficiency gains from TurboQuant are likely to fuel expansion in the HBM market as AI adoption becomes economically viable at scale. These dynamics should actually serve as a tailwind for more GPUs -- each still demands HBM systems alongside. The recent sell-off in Micron stock is a classic example of headline-driven myopia. In reality, Nvidia's GPUs will continue devouring Micron's DRAM chips because bandwidth -- not just capacity -- is increasingly defining AI performance and optimization.Read NextApr 7, 2026 •By David Jagielski, CPA1 Chart Investors Needs to See Before Buying Micron Technology StockApr 7, 2026 •By Neil Rozenbaum5 Stocks That Look Way Too Cheap After the Market SelloffApr 6, 2026 •By Rick OrfordWhere Will Micron Technology Stock Be in 5 Years?Apr 6, 2026 •By David Jagielski, CPAThe Big Reason Behind Micron's Impressive Growth?

Prices Have Been Soaring, and That Isn't SustainableApr 5, 2026 •By Adam SpataccoAfter a Monster Run, Is Micron Still Worth Owning?Apr 4, 2026 •By Geoffrey SeilerThis Growth Stock Is Down 20% in the Great Rotation. I Think That's a Mistake.About the AuthorAdam Spatacco is a contributing Motley Fool technology analyst covering artificial intelligence, robotics, autonomous driving, e-commerce, and cybersecurity stocks. Previously, Adam was an investment banking analyst specializing in mergers and acquisitions, as well as debt and equity capital raises, for software companies. He later worked in corporate development at venture-backed technology start-ups. He holds a bachelor’s degree in business administration with a concentration in finance from the University of Richmond.TMFmoneyballX@moneyballinvestStocks MentionedMicron TechnologyNASDAQ: MU$377.06(-0.18%)-$0.70NvidiaNASDAQ: NVDA$177.77(+0.07%)+$0.13*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.