Unpacking the Latest Pullback in Micron Stock

If you look astir astatine semiconductor stocks lately, you'd deliberation determination was thing terribly incorrect with the industry. Many stocks person fallen hard implicit the past weeks, including shares of Micron Technology (NASDAQ: MU), which are down 27% since mid-June.

But the driblet isn't tied to problems successful Micron's concern and is alternatively being fueled by wide capitalist skepticism astir artificial quality (AI) spending.

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Honestly, the sell-off appears much similar a knee-jerk absorption than a existent appraisal of Micron's opportunities. Here's why.

$1 trillion successful semiconductor worth vanished successful conscionable 1 period

Micron's diminution began soon aft the institution released its results for the fiscal 3rd 4th (ended May 28), successful which income accrued 345% to $41.5 cardinal and net per stock spiked much than 1,200% to $25.11.

Instead of being satisfied with specified awesome results, investors began worrying that the monolithic spending spree from tech companies that's presently underway volition yet dilatory down, and that Micron's maturation is unsustainable arsenic a result.

Those fears were compounded successful the pursuing weeks arsenic different semiconductor stocks suffered akin fates. A CNBC study recovered that 20 of the world's astir invaluable semiconductor companies -- including Micron -- mislaid $1.3 trillion successful marketplace headdress worth successful July.

It's not uncommon for immoderate investors to instrumentality their gains aft a immense stock terms run-up -- Micron's banal is inactive up 720% implicit the past 12 months -- but the pessimistic outlook for Micron and its peers does look unwarranted.

Consider that Alphabet, 1 of the largest investors successful information centers, said conscionable respective weeks agone that it would raise its AI capex to up to $205 cardinal this twelvemonth -- and that 2027 capex volition "increase significantly."

Amazon's spending is rising rapidly, too. Management said the company's capex this twelvemonth volition scope astir $220 billion, up astir 66% from 2025 levels.

This doesn't dependable similar an AI spending slowdown to me.

The latest Micron banal pullback is simply a buying accidental

With AI spending inactive good underway and Micron already benefiting from representation spot demand, investors who've been waiting to bargain Micron whitethorn privation to see doing truthful now.

Management believes the representation shortage volition persist astatine slightest done 2027, and chap representation spot institution SK Hynix thinks it could past done 2030.