Micron's 13% Drop: When Market Sentiment Overrules a $33.5 Billion Quarter

Micron shares fell 13% after Broadcom miss and strong jobs data, but record revenue, 180% annual gain, and fully booked HBM capacity show strong fundamentals.

A stock that has nearly tripled in twelve months should be accustomed to volatility — but a 13% plunge in a single week still raises eyebrows. Micron shares closed Friday at €755.00, a full 19.57% below the 52-week high of €938.70, after a rapid selloff that erased a chunk of the year's breathtaking 180% gain. The decline looks brutal on the surface, yet the underlying business story has arguably never been stronger.

The selloff had little to do with Micron itself. On 4 June, a Broadcom earnings miss sent its shares down more than 12% in premarket trading, dragging the entire AI semiconductor complex along. CEO Hock Tan's failure to raise the annual AI revenue forecast spooked investors, and memory names were swept up in the sector-wide reassessment. Then Friday's US jobs report, which showed 172,000 net new payroll additions against expectations of only 80,000, dashed hopes for an imminent Fed rate cut and added macro headwinds.

That combination — a sector shock layered with macro disappointment — is what delivered the 13% weekly blow. But the damage was technical and sentiment-driven, not fundamental. Micron's latest reported quarter saw revenue jump to $23.86 billion from $13.64 billion in the prior quarter and just $8.05 billion a year ago. GAAP net income reached $13.79 billion. The top line has nearly tripled year-on-year, and the company beat Street expectations while also raising its outlook.

The engine behind the numbers is High Bandwidth Memory. Micron has stated that its entire HBM production for fiscal 2026 is already committed under long-term contracts. Customers are locking in capacity early, a sign that the demand surge is no fleeting cycle. The company is planning capacity expansions totaling roughly $200 billion, with AI training and inference expected to account for more than 55% of HBM demand in the same year.

For the current quarter, Micron guided to record revenue of $33.5 billion, with a $750 million buffer on either side. The gross margin target of 81% is extraordinary for a memory company traditionally subject to sharp cyclical swings. Adjusted earnings per share are pegged at $19.15, within a range of $0.40. Capital expenditure for fiscal 2026 is set to exceed $25 billion, and the company has signaled a meaningful increase the following year.

Analysts are already penciling in even higher numbers. The consensus for the quarter now sits at roughly $33.8 billion, implying 263% year-on-year growth. But the real test will come on 24 June, when Micron reports results and, more importantly, delivers forward guidance. If management offers a revenue outlook north of $40 billion for the following quarter — above the current analyst estimate of around $39.6 billion — the stock would gain fresh justification for its elevated valuation.

That valuation is a sticking point. The average analyst price target stands at €641.72, roughly 15% below Friday's close, suggesting Wall Street as a whole sees the shares as expensive. Yet that consensus may be lagging reality. Morgan Stanley, for instance, more than doubled its target after the May surge in DRAM prices, a move that many models have not yet absorbed. The gap between the current price and the average target could shrink if earnings momentum continues to accelerate.

Technically, the pullback has cooled an overheated rally without breaking the uptrend. The stock still trades 41.53% above its 50-day moving average and 142.71% above its long-term average. The relative strength index of 56.2 points to a pause rather than a panic — oversold territory has not been reached. The €755.00 close serves as an initial support level; a break below it would open the path toward the 50-day moving average, while a move back toward the €938.70 high would signal renewed buying conviction.

The bear case rests on the inevitable cyclical turn that has always haunted memory stocks. The current high prices encourage capacity expansion, and competitors like SK Hynix — the leader in HBM and a key supplier to Nvidia — are not standing still. But for now, Micron's order book is sold out through 2026, its margins are at historic highs, and the broader AI buildout shows no signs of decelerating. The 24 June earnings call will determine whether the recent selloff was a healthy consolidation or a warning shot across the bow.