Micron Earnings Preview: MU Stock Down 11% as Traders Fear Margins Numbers
Micron Technology is under selling pressure going into results week, reflecting increased anxiety about valuations, execution risk, and...
Quick overview
- Micron Technology faces selling pressure ahead of its earnings report, following a sharp pullback from record highs driven by AI optimism.
- Despite strong institutional buying earlier in the week, investors are reassessing valuations and execution risks as earnings expectations remain elevated.
- Analysts project significant revenue growth for Micron, with expectations of a 48% year-over-year increase in Q1 2026, driven by improving pricing dynamics.
- High-Bandwidth Memory is emerging as a key growth driver for Micron, with projections indicating substantial revenue contributions in the coming years.
Micron Technology is under selling pressure going into results week, reflecting increased anxiety about valuations, execution risk, and near-term expectations after racing to record highs on AI-driven optimism.
Micron Stumbles Ahead of Earnings After Record Run
Micron Technology began the earnings week on a weak note, extending a sharp pullback that started late last week. The decline followed a powerful rally that had pushed the stock to all-time highs, driven by strong institutional buying and growing confidence in artificial intelligence–related memory demand. However, the abrupt reversal suggests traders are increasingly reluctant to hold aggressive positions into the company’s earnings report.
After peaking midweek, Micron shares fell 5% by Friday and extended losses to more than 10% from the highs of $265.50. The move capped off a volatile stretch that underscored how quickly sentiment can shift when expectations become stretched.
Institutional Buying Was Strong—but Momentum Faded Quickly
Earlier in the week, Micron benefited from a surge in large institutional buy activity, signaling strong conviction in the company’s AI exposure and improving fundamentals. That enthusiasm, however, proved fleeting as investors began to reassess valuation levels and risk ahead of earnings.
Despite the pullback, Wall Street has not turned bearish. Stifel raised its price target on Micron ahead of the December 17 earnings release, citing sustained strength in AI infrastructure spending and firm pricing trends for advanced memory products. The firm maintained its Buy rating and lifted its target to $300 from $195.
Stifel’s thesis rests on disciplined supply behavior across the memory industry. Rather than expanding capacity aggressively, suppliers are prioritizing higher-value data-center memory while gradually working to improve pricing in more traditional PC and smartphone segments. This approach, according to the firm, should help support margins even as volumes recover more slowly.
Earnings Expectations Remain Elevated
Consensus forecasts remain robust. Analysts expect Micron to post earnings of roughly $3.90 per share on revenue near $12.8 billion for the upcoming quarter. These figures reflect a sharp recovery from the downturn that plagued the memory market in recent years.
Stifel expects Micron’s guidance for both its fiscal first quarter (ending November) and fiscal second quarter (ending February) to reinforce confidence that the upcycle is gaining traction. Year-end customer purchasing activity, particularly among cloud service providers, is also seen as a stabilizing factor for near-term demand.
AI Enthusiasm Drives Gains—but Raises the Stakes
Micron’s stock performance this year has become a textbook example of the tension between transformative technology trends and the cyclical nature of semiconductors. The shares surged relentlessly throughout 2024, rising more than 170% at their peak before reversing sharply.
That extraordinary run left little margin for error. As the stock climbed, investors began questioning whether valuations already assumed near-perfect execution in an industry historically prone to sharp pricing swings and sudden inventory corrections. The recent pullback suggests the trade had become crowded, with even minor concerns triggering outsized moves.
Technical Support Holds—For Now
From a technical perspective, Micron initially found support at its 50-day simple moving average, a level that has repeatedly acted as a floor during prior corrections this year. Buyers stepped in quickly, lifting the stock back toward the mid-$260s.
However, sentiment deteriorated again following reports that Micron plans to phase out its Crucial consumer business by early 2026. The move would effectively mark an exit from the retail DRAM and SSD market. While analysts generally view this as a rational shift toward higher-margin enterprise and AI-focused segments, the news raised questions about near-term revenue mix and execution risk during the transition.
MU Stock Chart Daily – Sellers Have Broken Below the 20 SMA
As a result, shares slid more than 10% over three sessions and are once again testing key technical levels, including the 20-day moving average (gray). Sellers are pushing toward the 50-day average as well (yellow) now at $220, signaling growing short-term caution.
Wall Street Sees Explosive Growth in Q1 Results
Despite the recent volatility, earnings expectations continue to point sharply higher. According to estimates compiled by Visible Alpha, Micron is projected to deliver a 48% year-over-year increase in revenue to a record $12.93 billion for fiscal Q1 2026. Adjusted earnings per share are expected to more than double to approximately $3.96.
Wedbush, among the more optimistic voices, expects Micron to outperform even its own bullish guidance. The firm points to significant pricing momentum across memory products as the primary driver.
Pricing Power and Margins Take Center Stage
Improving pricing dynamics are central to the bull case. DRAM prices are expected to rise at least 30% during the quarter, while NAND pricing could increase by roughly 20%. These gains, combined with a richer product mix, are pushing margins sharply higher.
Wedbush’s models now suggest Micron’s gross margins could approach 60% over coming quarters, with annual earnings potentially exceeding $30 per share by fiscal 2025. Such outcomes would represent a dramatic turnaround from the industry’s recent trough.
Still, investors remain keenly aware that memory pricing is inherently volatile. As a result, gross margin progression will be closely watched as a measure of how durable the recovery truly is.
HBM Emerges as a Defining Growth Engine
High-Bandwidth Memory has become one of Micron’s most important growth drivers. The company is expected to confirm that HBM volumes are ramping in line with plans and that its competitive position is improving relative to rivals such as SK Hynix and Samsung, both of which are aggressively targeting this high-margin segment.
HBM revenue is projected to reach an annualized run rate of $8 billion by Q4 2025. By early fiscal 2026, HBM is expected to account for a revenue share comparable to traditional DRAM, supported by the successful rollout of HBM3E.
Looking further ahead, Micron has already sold out nearly all of its HBM capacity for calendar year 2026. The next-generation HBM4E is currently undergoing customer qualification, with both standard and custom versions expected to launch, reinforcing long-term visibility in one of the most attractive areas of the memory market.
Bottom Line: Strong Fundamentals, Nervous Positioning
As Micron approaches earnings, the story is less about weakening fundamentals and more about elevated expectations. AI-driven demand, pricing power, and margin expansion remain firmly in place—but after a historic rally, investors are increasingly cautious. The upcoming results will need to validate not only growth, but also sustainability, to restore confidence and stabilize the stock’s next move.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Save