Key Takeaways
- Micron (MU) stock plummeted approximately 8% on Wednesday, followed by another 4.4% decline in Thursday’s premarket session, hovering near $865
- Dutch equipment manufacturer ASML announced enhanced efficiency in memory chip production using its EUV technology, benefiting competitors SK Hynix and Samsung
- News emerged that CoreWeave was considering protective measures against potential memory price declines, shaking market confidence
- Leveraged exchange-traded funds are magnifying Micron’s decline, with memory-focused leveraged ETF holdings contracting 34% since June
- Wall Street analysts continue backing the stock with a Buy consensus and average target of $1,548.86
Micron Technology (MU) stock was hovering between $865 and $886 during Thursday’s premarket hours following Wednesday’s 8% plunge. The memory-chip manufacturer has shed approximately 20% of its value over the last 30 days, despite posting impressive gains of nearly 700% over the trailing 12-month period.
A trio of distinct challenges is simultaneously pressuring Micron, creating a compounding negative effect.
The initial setback originated from ASML. On Wednesday, the Netherlands-based semiconductor equipment manufacturer revealed that its extreme ultraviolet lithography systems can manufacture memory chips with greater efficiency. Both SK Hynix and Samsung have announced intentions to deploy the upcoming generation of these advanced machines. For a stock valued at Micron’s current elevated levels, any indication of expanded memory chip production capacity is sufficient to unsettle investors.
The second challenge emerged from reporting by Reuters. According to the news outlet, CoreWeave has been examining financial instruments designed to shield the company from potential future declines in memory and storage pricing. While CoreWeave refused to provide comment, the majority of industry analysts continue projecting memory price appreciation extending through at least 2027. Nevertheless, the mere implication that industry participants are contemplating a price reversal proved adequate to spark investor exits.
Leveraged Exchange-Traded Funds Amplifying Downward Pressure
The third element is mechanical in nature. Leveraged exchange-traded funds — investment vehicles employing derivatives to multiply daily equity movements — have emerged as a significant player in memory-chip securities. As share prices decline, these funds magnify the downward momentum. Additionally, these funds must rebalance their positions daily to preserve their target leverage ratios, generating cumulative downward pressure.
J.P. Morgan analyst Nikolaos Panigirtzoglou observed on Wednesday that assets managed by leveraged memory ETFs have contracted 34% since June, versus 13% across the broader leveraged equity ETF landscape. He further highlighted that leveraged memory ETF assets constitute three times the market cap proportion relative to the general equity ETF sector.
From a technical analysis perspective, Micron is currently trading 14.9% beneath its 20-day moving average and 4% under its 50-day average. Critical support appears positioned around $854.50.
Contrarian Investor Maintains Confidence
Not all market participants are retreating. Alger Executive Vice President Ankur Crawford stated Wednesday that Micron would be her top stock pick if making a purchase today. During a CNBC appearance, she projected the company could deliver cash flow equivalent to approximately 30% of its present market capitalization within the coming 18 months.
Crawford contended that investors are prematurely declaring a cycle peak and that supply limitations could sustain earnings expansion into 2027 or potentially 2028.
Wall Street currently anticipates Micron will post earnings of $31.24 per share when reporting results around September 22 — representing a substantial increase from $3.03 in the prior-year period. Revenue projections stand at $50.72 billion, compared with $11.31 billion in last year’s corresponding quarter.
KeyBanc elevated its price target to $1,750 on July 14, reaffirming an Overweight rating. Cantor Fitzgerald maintains a $2,000 target, also with an Overweight designation.
The consensus Buy recommendation and $1,548.86 average price objective remained unchanged as of Thursday morning.
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