Micron shares are falling again, but there may be a turning point soon. The stock dropped 4% in premarket trading on Wednesday, adding to a 13% loss over the last five sessions as investors move away from semiconductor stocks, which is putting pressure on the memory chip sector. Even with these recent losses, Micron is still up more than 700% over the past year. Here’s what is causing the recent weakness and why the June 24 earnings report could change things.
Micron is not the only company under pressure. According to UBS Global Wealth Management’s chief investment officer, the tech sector is dealing with higher interest rate expectations, high valuations, and uncertainty about when AI will start making money. These factors are making investors less willing to pay for future profits, which affects fast-growing and high-priced stocks the most.
Micron’s valuation stands out. As of Tuesday’s close, the stock trades at about 9.8 times its expected earnings, while the Nasdaq Composite trades at around 26 times. This low number reflects the memory industry’s history of big ups and downs, where strong earnings are often followed by quick drops. Some critics say it is risky to value a cyclical company based on its best earnings.
Supporters of the stock see things differently. For the fiscal third quarter, Micron is expected to report adjusted earnings of $19.43 per share, a big jump from $1.71 a year ago. This kind of growth is hard to ignore or call just another cycle peak. A research analyst at ClearBridge recently said that the limited supply of high-bandwidth memory and DRAM should keep prices and earnings strong through at least 2027. This supports the idea that this cycle could last longer than usual.
The June 24 earnings report will be the clearest test of this idea.
