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Shares of Micron (NASDAQ:MU | MU Price Prediction) finally ran into a ceiling, and it was after the company clocked in some spectacular quarterly earnings results. Undoubtedly, it’s the amazing quarterly earnings that are usually the major culprit for sparking a bit of a reversal in the high-flying stocks leading the AI trade.
Of course, it may not seem to make a whole lot of sense, especially when you consider the magnitude of Micron’s latest beat. Still, that’s how it is when it comes to the companies that continue sprinting on the expectations treadmill. Sometimes, it takes not only a beat or a blowout but a shocker of an upside surprise as well as a forecast of some sort that’s off the charts.
Whenever you raise the bar that high, it becomes difficult, even for the best-positioned company on Earth, to keep getting those big rounds of applause from investors. Eventually, the crowd grows tired of clapping their hands, and it takes more to actually impress. Of course, the big question for the memory juggernaut is what will be up next as the firm moves after landing a home run that was met with pin-drop silence from the crowd.
Undoubtedly, the CapEx bug seems to have bitten even the great Micron, a firm that has been more magnificent than the Mag Seven in recent months. The CapEx guide came in starting at $25 billion. Now, that’s a far cry away from the magnitude of cash (think hundreds of billions of dollars) that the hyperscalers are sinking into AI CapEx. Still, it seems like any kind of spending is the perfect formula for a negative reaction.
The terrain could get bumpier in the near term
That’s just the type of market climate we seem to be in right now. Of course, you cannot blame profit-takers for booking gains after a gain of more than 300% in a year. That’s just being smart. However, when it comes to letting winners continue to win, though, I do think that there’s also a pretty strong case for hanging on or even buying into the latest slide in shares of Micron as the winning streak turns into a losing streak, with Micron stock falling into the red for four straight sessions.
While the latest downtrend might not be so quick to reverse, with the stock now off over 14% from its all-time high just north of $460 per share, and a potential triple-top technical pattern that could be in the works, I do think that it could make a lot of sense to look at the $295-300 range as a potential entry point. Of course, many of the bulls on Wall Street aren’t looking at such depth. And there’s a good chance that dip-buyers might not have a shot to buy at those depths unless things really get nasty across the AI waters.
Of course, if the correction in the Nasdaq turns into a bear market, we could easily see such levels be retested. But, in the meantime, I think the bull camp has a stronger case for buying right here at just under $400 instead of timing some sort of floor. Micron is sold out for the year, and as we progress through 2026, we could soon see it being sold out for the early innings of next year.
Micron’s CapEx guide is a positive
Even with the $25 billion in CapEx to boost capacity, demand still looks unprecedented as the AI boom heads into high gear and memory demands stay off the charts. Personally, I’m completely comfortable with Micron spending tens of billions. In fact, I’d be more concerned if it weren’t aggressively building fabs and next-generation machinery.
In any case, I think Micron is pretty misunderstood right here. And many of the bulls seem to be in the same camp, with Barclays actually looking for the stock to hit $675.00 per share. That’s a 70% gain from here and would make the latest post-earnings plunge nothing short of a gift to investors.
Maybe it is a “structural” shift, as the firm believes, that is in the cards for Micron. I think the “undersupply” might be severe enough that the firm’s latest CapEx might need to be a bit higher than the low range of the forecast. Either way, my bet is that such investments are bound for a decent return. The same can’t be said for the more aggressive hyperscalers.
