Montage Stock Falls 7% Despite 58% Profit Growth as AI Fears Hit Sector

Edgen Stock

·Mar 30 2026, 17:00

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Key Takeaways

Montage Technology's stock fell sharply despite posting robust annual results, as a technology announcement from Google sent a chill through the entire memory chip sector. Investors sold off shares on fears that new AI efficiencies could dampen future hardware demand, overshadowing the company's strong performance.

Strong Earnings Ignored: Montage Technology reported a 58.4% increase in annual net profit to RMB 2.236 billion and a 49.9% rise in revenue, yet its stock fell 6.88%.
Sector-Wide Headwind: The sell-off was triggered by Google's new TurboQuant AI algorithm, which promises to significantly reduce memory usage, sparking investor concerns about lower demand for memory chips.
Analyst Counterpoint: Some analysts argue the market reaction is short-sighted, suggesting that greater AI efficiency will lower costs, expand AI adoption, and ultimately drive higher long-term demand for memory hardware.

Stock Drops 6.9% Despite 58% Profit Surge

Montage Technology (06809.HK) saw its stock price fall 6.88% despite announcing strong 2025 annual results that significantly beat the previous year's performance. The company reported revenue of RMB 5.456 billion, a 49.9% year-over-year increase, and a net profit of RMB 2.236 billion, marking a 58.4% rise. The company also declared a final dividend of RMB 3.9 per 10 shares. The market's negative reaction indicates that the company's impressive financial performance was completely overshadowed by external industry pressures.

Google's AI Update Triggers Sector-Wide Sell-Off

The sell-off in Montage Technology was not an isolated event but part of a broader downturn affecting memory chip manufacturers, including Samsung Electronics and SK Hynix. The catalyst was Google's introduction of TurboQuant, an advanced AI algorithm capable of reducing memory usage by a factor of six. This technological breakthrough sparked fears among investors that increased efficiency in AI models would lead to a structural decrease in demand for the physical memory chips that companies like Montage produce.

While the immediate market reaction was bearish, some analysts believe the fears are misplaced. Morgan Stanley's research suggests that by lowering inference costs, such efficiency gains could make AI more accessible and expand its use cases. This expansion would, in turn, drive higher overall demand for memory in the long term, creating a potential buying opportunity for investors willing to look past the short-term panic.