It's a rough morning for semiconductor stocks, and Micron Technology (MU) is caught in the downdraft. Shares dropped more than 7% in premarket trading Thursday after investors took a dim view of Broadcom Inc. (AVGO)'s latest earnings report—even though the numbers were strong.
Broadcom delivered solid quarterly results, but the market was hoping for more. The company kept its long-term AI semiconductor revenue forecast at over $100 billion by fiscal 2027, rather than raising it. And its fiscal third-quarter AI revenue projection largely matched what analysts already expected. When valuations are already pricing in aggressive growth, maintaining the status quo can feel like a letdown. That triggered profit-taking across the AI trade, and Micron got swept up in the sell-off.
It's a classic case of "good news, but not good enough"—a theme that's become familiar in the AI chip space. When expectations are sky-high, simply meeting them doesn't cut it.
What's Next for Micron?
Micron's next big moment is its earnings report, scheduled for June 24. Wall Street is looking for earnings of $19.29 per share, a huge jump from $1.91 a year ago. Revenue is expected to hit $33.88 billion, compared with $9.30 billion in the same period last year. That's the kind of growth that justifies a premium valuation—and Micron's P/E ratio of 50.9 certainly reflects that.
Analysts are still bullish overall, with a Buy consensus and an average price target of $827.61. Recent upgrades suggest confidence is building:
- Morgan Stanley maintained an Overweight rating and raised its price target to $1,050 on June 3.
- Raymond James maintained an Outperform rating and raised its target to $1,100 on June 1.
- Susquehanna reiterated a Positive rating and raised its target to $1,750 on May 29.
That $1,750 target from Susquehanna is notably aggressive, implying significant upside from current levels. But with the stock trading near $1,000, there's still a gap between the average target and the most optimistic forecasts.
Price Action
Micron shares were down 7.38% at $999.86 in premarket trading Thursday, according to market data. The sell-off reflects broader nervousness in the semiconductor space, but it's worth keeping an eye on whether this is a temporary dip or the start of a larger correction.
For now, all eyes are on June 24. If Micron delivers the kind of numbers analysts expect, today's sell-off might look like a buying opportunity in hindsight.
