Micron Technology, Inc. (NASDAQ:MU) stock slid by more than 2% during Thursday’s premarket session as traders weigh a pullback in high-beta chip names even with a firmer overnight index tone. Nasdaq futures are up 0.65% while S&P 500 futures have gained 0.39%.
Micron remains central to the memory trade as analysts point to tight supply, strong demand and pricing trends as the key factors shaping the sector after a sharp pullback.
Analysts Say Supply Remains Tight
Wolfe Research senior analyst Chris Caso told CNBC on Wednesday that the recent semiconductor weakness reflects a reset in expectations after a major rally. He said the SOXX index doubled over roughly three months before falling about 25% from its high.
Caso said Micron recently delivered what he viewed as one of its strongest reports, supported by robust memory demand. He said memory suppliers remain severely supply constrained because they cannot quickly add production, which supports Wolfe’s bullish view on the group.
Caso also said oversupply risk looks unlikely in the near term because the industry lacks enough physical space to produce the semiconductors customers want. He said any potential oversupply cycle may not emerge before 2028 at the earliest because new capacity requires new buildings that take time to complete.
Pricing Trends Become The Next Catalyst
Susquehanna senior equity research analyst Mehdi Hosseini told CNBC on Tuesday that investors should stay patient with memory stocks after the recent pullback. He said the next phase depends on whether commodity memory prices can move sideways or roll over like they have in past cycles.
Hosseini said the “easy money” in memory stocks has largely been made, although he remains constructive on the industry’s longer-term outlook.
For investors without exposure to the sector, Hosseini recommended waiting rather than chasing recent weakness. “I think you’re going to have better pricing over the next month or two,” he said, adding that investors typically return to the memory sector in late summer.
While memory stocks have surrendered a significant portion of their recent gains over the past month, Hosseini noted they continue to outperform levels seen three months ago.
The comments come after a volatile month for memory-chip makers, including Micron, as investors reassess whether pricing gains fueled by artificial intelligence demand can continue.
The stock trades at about 16.7 times earnings. Analysts maintain a Buy consensus with an average price forecast of $1,548.86. Recent analyst actions include:
- KeyBanc Capital Markets: Overweight; price forecast raised to $1,750 on July 14.
- Cantor Fitzgerald: Overweight; price forecast raised to $2,000 on June 29.
- Cantor Fitzgerald: Overweight; $1,500 price forecast reiterated on June 25.
Technical Analysis
Micron remains in a long-term uptrend, although its short-term momentum has weakened.
The stock trades 21.2% below its 20-day simple moving average and 23.8% below its 50-day SMA. However, it remains 1.1% above its 100-day SMA and 42.8% above its 200-day SMA. The shares have gained 544.06% over the past 12 months.
The 20-day SMA sits below the 50-day SMA, signaling weaker near-term momentum. However, the 50-day SMA remains above the 200-day SMA, suggesting the longer-term uptrend is still intact.
Traders may look for the stock to hold above its 100-day SMA as a sign the recent pullback remains under control.
Momentum indicators also point to caution. The moving average convergence divergence, or MACD, remains below its signal line, indicating buying momentum has weakened.
Key resistance stands near $818.50. Key support is around $652.
Price Action
MU Stock Price Activity: Micron Technology shares were down 1.15% at $730.50 during premarket trading on Thursday, according to Benzinga Pro data.
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