Micron Stock Plunges Into Bear Market After Epic Rally
💡 Key Takeaway
Micron's sharp reversal highlights the extreme volatility in AI memory stocks, where record results triggered profit-taking and new fears about future demand.
What Happened to Micron Stock?
Micron Technology's stock has officially entered a bear market, defined as a drop of over 20% from its recent peak. This sharp reversal is particularly stunning because it comes right after the company reported its best quarterly results ever. The stock had been on an incredible run, surging approximately 666% from its low in April 2025 to a high in March 2026.
The recent sell-off reflects a classic 'sell-the-news' event. After such a massive rally leading into earnings, many short-term traders decided to lock in profits once the blockbuster results were confirmed, turning positive news into a selling catalyst.
Adding to the pressure are new fundamental concerns. Last week, news about Google's 'TurboQuant' compression technology raised fears that big tech companies might eventually need fewer memory chips for their AI systems, potentially weakening long-term demand.
Investors are also growing nervous about Micron's hefty multi-year capital expenditure plans. While this spending is aimed at capturing the AI-driven memory boom, it raises questions about future free cash flow and the risk of creating too much capacity down the line.
Why This Reversal Matters for Investors
This matters because it shows how quickly sentiment can flip in high-flying, crowded trades like AI memory chips. Even the strongest fundamentals can be overshadowed by profit-taking and shifting narratives in the short term.
The valuation story is now split. Micron's trailing P/E ratio is around 17, but its forward P/E has collapsed to roughly 6. This compression suggests Wall Street expects earnings to grow dramatically, but it also implies the market is either anticipating a peak in the memory cycle or underestimating the durability of AI demand.
From a technical perspective, momentum has deteriorated rapidly. Micron's Relative Strength Index (RSI) has fallen to around 34, which is near oversold territory. This often indicates that intense selling pressure may be exhausting itself, though it doesn't guarantee an immediate bounce.
The current situation presents a dilemma. The stock faces negative momentum, capex fears, and a compressed valuation. This combination could lead to a prolonged period of consolidation, or it could set the stage for a sharp rebound if investors refocus on the long-term AI memory growth story.
Bobby Insight
Micron is in a volatile reset phase; wait for the selling pressure to stabilize before considering a new entry.
The stock is technically oversold and forward valuation looks cheap, which is appealing. However, the negative momentum and legitimate concerns about capex and long-term demand narratives need to clear before a sustainable uptrend can resume.
What This Means for Me
