Micron Technology (NASDAQ:MU) stock has entered a bear market after plunging more than 26% from its highest level this year. The sell-off has coincided with a broader retreat in memory stocks as investors take profits and concerns grow about the sustainability of AI spending.
Micron Stock Has Retreated Amid Rising Concerns About AI Spending
MU stock has plunged more than 26% from its highest level this year, joining a broader sell-off across the memory sector. Other leading memory stocks, including SanDisk (NASDAQ:SNDK) and Western Digital (NASDAQ:WDC), have also retreated sharply. Meanwhile, the Roundhill Memory ETF (CBOE: DRAM) has fallen 34% from its highest point of the year.
The options market is not sending a clear signal about Micron’s near-term outlook. Data shows that implied volatility has climbed to about 99%, indicating that investors expect heightened price swings. Meanwhile, the put-to-call ratio stands at 1.19, suggesting a modest bearish or hedging bias rather than aggressive bearish positioning.
Wall Street analysts are optimistic that Micron has more upside to go. Benzinga data shows that the consensus target for the stock is $1,268, up by 37% from the current level. DA Davidson’s Gil Luria boosted the target from $1,500 to $2,000. Needham hiked its target from $1,550 to $1,650.
Micron’s business is thriving, helped by the rising demand for its products amid the artificial intelligence boom. Its recent results showed that its third-quarter revenue jumped by over 300% to $41.4 billion, with management predicting that it will hit $50 billion in the fourth quarter.
There are also signs that memory demand is rising. In its earnings this week, Alphabet (NASDAQ:GOOG) boosted its capital expenditure spending to over $205 billion. Tesla (NASDAQ:TSLA) also expects to spend $25 billion this year.
Micron Needs to Overcome Key Technical Hurdle
Despite the optimism, Micron stock needs to overcome the emerging head-and-shoulders pattern. This pattern is made up of a head, two shoulders, and a neckline. In this case, the neckline is at $850.
The Relative Strength Index (RSI) has continued falling, moving from a high of 86 in May to 45 today. Therefore, there is a risk that it will continue falling in the near term. This view will be confirmed if it drops below the neckline of $850.
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