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Micron Technology just delivered the best quarter in its history. However, three days later, a federal courtroom in California turned that story upside down.

A class-action lawsuit filed on June 25 accuses Micron (MU), Samsung, and SK Hynix of secretly restricting memory chip supply to inflate prices by as much as 700% since 2022. 

The timing is particularly painful. Micron's stock touched an all-time high of $1,255 the same day the suit landed.

However, as of July 1, shares had tumbled 16.01% over five trading sessions, sliding $196.72 to close at $1,032.28. 

The worst single day came on July 1 itself, when Micron dropped by 10.57%, or $122.01, from the prior close of $1,154.29.

Investors now have to decide whether there is real legal risk involved, or just a normal pullback after a huge run-up.

A new class action lawsuit, Garciaguirre v. Samsung Electronics, was filed in the U.S. District Court for the Northern District of California. Judge Noel Wise is assigned to the case, according to Communications Today.

Seventeen plaintiffs filed the suit. Most are individual consumers and small businesses.

They accuse Micron, Samsung, and SK Hynix of coordinating cuts to older DDR3 and DDR4 memory production. 

Related: Micron Technology's stock buybacks explained

They also allegedly claim that the companies shifted that freed-up capacity toward AI memory, known as high-bandwidth memory or HBM, according to Yahoo Finance. HBM sells at a higher price.

Micron has denied the allegations. 

In a statement to Moneywise, the company said it competes vigorously and fairly, in compliance with all applicable laws. Micron said it will defend itself against the claims.

The three companies control roughly 90% of the global DRAM market, and plaintiffs argue that percentage made the alleged supply cuts possible. 

Samsung and SK Hynix both pleaded guilty to criminal DRAM price fixing in the early 2000s, paying a combined $485 million in fines, Rain Intelligence reported. 

A nearly identical 2018 lawsuit against the same three companies was dismissed in 2020.

The lawsuit landed days after Micron posted record third-quarter results. 

Revenue hit $41.46 billion, up from $9.30 billion a year earlier. GAAP net income came in at $28.24 billion, or $24.67 per share, according to an SEC release.

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Micron's HBM output is sold out through 2026. Right now, management can fill only 50% to 66% of customer demand for it.

The company also locked in 16 long-term customer agreements this quarter. One of them, signed July 1 with General Motors, covers automotive memory and storage, GlobeNewswire reported.

Those deals carry roughly $22 billion in financial commitments that customers cannot walk away from. That's part of why Micron has leaned harder into buybacks than dividends.

Wall Street has mostly shrugged off the lawsuit. 

Cantor Fitzgerald raised its price target to $2,000 from $1,500 just days before the news broke. The firm called Micron a top pick in the sector, Watcher Guru reported. 

According to TheStreet, the average 12-month price target is $1,563.93 across 30 analysts, which is well above where shares trade now.

The stock's gains help to explain that confidence. Micron has gained about 263% in 2026, compared with roughly 10% for the S&P 500 over the same stretch. 

Antitrust cases can also drag on for years without disrupting near-term operations, unless a court orders remedies.

Here are three things to track from here:

If the case survives early motions, internal emails and records will surface. Those documents could support the collusion claim or unravel it.

Fourth-quarter guidance. Micron has told investors to expect $49 billion to $51 billion in revenue and roughly $31.00 in adjusted earnings per share. When Micron reports actual results, hitting those numbers would signal that AI memory demand is strong enough to push through the legal noise.

SK Hynix's Nasdaq debut. The rival plans to list on Nasdaq around July 10, Crowdfund Insider reported. The offering could raise close to $29 billion, giving investors a direct alternative to Micron for HBM exposure.

None of this proves collusion. It also doesn't erase Micron's blowout quarter.

However, it does add a real, slow-moving risk on top of a stock already priced for near-perfection. Investors who buy the dip are betting on both stories at once.

Related: Buffett's successor, Greg Abel, doubles down on one AI stock

This story was originally published by TheStreet on Jul 3, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.