Micron Enters Bear Market: Rebound or Further Collapse?

According to Benzinga, Micron Technology (MU-US) has entered a bear market as its stock price has plummeted over 26% from its peak this year. This sell-off coincides with a broad pullback across the memory chip sector, as investors take profits and concerns grow over the sustainability of artificial intelligence spending.

Micron Technology (MU-US) has fallen over 26% from its year-high, joining the wider selloff across the memory industry. Other leading memory stocks, including SanDisk (SNDK-US) and Western Digital (WDC-US), have also declined sharply. Meanwhile, the Roundhill Memory ETF (DRAM-US) has dropped 34% from its year-to-date high.

The options market is not sending a clear signal about Micron's near-term outlook. Data shows implied volatility has climbed to around 99%, indicating investors expect significant price swings. At the same time, the put/call ratio stands at 1.19, suggesting a degree of bearish sentiment or hedging activity, but not an aggressively bearish stance.

Wall Street analysts remain optimistic about Micron's upside potential. Benzinga data shows the consensus price target is $1,268, 37% above current levels. Gil Luria of DA Davidson raised his target from $1,500 to $2,000. Needham also increased its target from $1,550 to $1,650.

Micron's business is thriving due to surging demand for its products driven by the AI boom. Its latest results show third-quarter revenue surged over 300% year-on-year to $41.4 billion, and management expects fourth-quarter revenue to reach $50 billion.

Moreover, signs of recovering memory chip demand are emerging. Alphabet (GOOG-US) announced last week it would raise its capital expenditure to over $205 billion. Tesla (TSLA-US) also expects to spend $25 billion this year.

Despite optimistic market sentiment, Micron's stock price needs to break above the forming head-and-shoulders top pattern. This pattern consists of a head, two shoulders, and a neckline. In this case, the neckline is at $850.

The Relative Strength Index (RSI) has continued to decline, falling from a May high of 86 to today's 45. As a result, there is a risk of further downside in the short term. A break below the $850 neckline would confirm this view.

Micron's stock fell 2.25% on Monday, closing at $900.20 per share.