MU Stock Eyeing $850 after Key Support Break as Asian Chip Rout and Legal Risks Trigger Sharp Selloff for Micron

Quick overview

Micron Technology shares extended their steep decline after a broad selloff in Asian semiconductor stocks reignited fears over AI valuations, while legal challenges and concerns about the memory cycle added to the bearish sentiment.

Asian Semiconductor Rout Weighs on Micron

Shares of Micron Technology came under intense selling pressure for a second consecutive session, falling more than 9% on Wednesday before plunging another 12% on Thursday. The sharp decline pushed the stock below a major technical support level, reinforcing bearish momentum and increasing the risk of a deeper correction.

The selloff coincided with a broad rout across Asian semiconductor stocks, where investors aggressively reduced exposure to AI-related companies following months of exceptional gains. South Korea’s equity market suffered one of its weakest trading sessions of the year, with technology shares leading the decline as concerns over elevated valuations spread throughout the semiconductor industry.

The breakdown in sentiment suggests investors are becoming increasingly cautious about whether the AI-driven rally can continue at its previous pace.

South Korean Chip Stocks Lead the Global Decline

Pressure intensified after South Korea’s benchmark KOSPI index experienced a sharp correction, with semiconductor companies bearing the brunt of the losses.

Shares of SK Hynix dropped more than 14%, while Samsung Electronics fell roughly 9%, extending weakness across the global memory chip sector.

Although comments from Federal Reserve Governor Christopher Waller suggesting that inflation pressures had eased provided some support for broader markets, they failed to stabilize semiconductor shares. Instead, investors continued rotating away from AI-related stocks amid fears that the sector’s remarkable rally may have become increasingly vulnerable to profit-taking.

As one of the largest beneficiaries of AI-driven memory demand, Micron was caught directly in the wave of global selling.

Technical Breakdown Signals Growing Weakness

From a technical perspective, Micron’s decline has become increasingly concerning.

The stock has now broken below an important support zone following its recent record highs, signaling that buying momentum has weakened considerably. Unless buyers regain control quickly, the next significant downside target sits near the $850 area, where previous consolidation occurred.

The speed of the decline reflects a notable shift in market psychology. Investors who were previously willing to pay premium valuations for AI-related growth are now becoming far more selective as concerns over stretched multiples and future earnings sustainability gain prominence.

Legal Challenges Increase Industry Uncertainty

Adding to the negative sentiment, Micron has been named alongside Samsung Electronics and SK Hynix in a newly filed U.S. class-action lawsuit.

The complaint alleges that the three companies restricted production of traditional DDR3 and DDR4 DRAM chips while prioritizing higher-margin high-bandwidth memory products used in AI servers. Plaintiffs argue that the strategy contributed to higher prices for conventional memory products by artificially tightening supply.

Given that the three manufacturers account for approximately 90% of global DRAM production, the lawsuit has renewed scrutiny over pricing practices across the memory industry. While the legal process is still in its early stages, the allegations introduce another layer of uncertainty for investors already questioning the sustainability of current industry conditions.

Technical Strength Meets Near-Term Valuation Questions

From a technical perspective, Micron’s fall below $311 in March and the quick rebound off the 100 daily SMA (green) was symbolically important. Buyers came back as broader stock market sentiment improved. As a result, we have seen a strong rebound and buyers have pushed MU stock above the $1,000 level in early June, reaching $1,210 which was broken yesterday. We saw a pullback under $1,000 and MU stock slipped to $864, although the 20 SMA held as support again on the daily chart and we saw a rebound  from there but now the 20 daily SMA is under attack.

MU Chart Daily – The 20 SMA Continues Is Under Attack

Oversupply Risks Begin to Re-emerge

Another source of concern stems from plans to expand semiconductor manufacturing capacity, particularly in South Korea.

Although demand for AI memory remains robust, investors are increasingly worried that aggressive production growth could eventually recreate the oversupply conditions that have historically characterized the memory industry.

The sector has long been known for its cyclical nature, alternating between periods of severe shortages and excess capacity. As new fabrication facilities gradually come online, markets are beginning to question whether today’s exceptionally strong pricing environment can be maintained over the medium term.

Strong Fundamentals Fail to Offset Bearish Sentiment

Fundamentally, Micron continues to deliver impressive operating results. The company recently exceeded revenue expectations, issued strong forward guidance, and continues benefiting from robust demand for DRAM and NAND memory used in AI infrastructure and hyperscale data centers.

Micron also announced a long-term supply agreement with General Motors to provide automotive memory and storage solutions for future vehicle platforms. In addition, the company unveiled a $250 million commitment supporting the Trump Accounts initiative, further demonstrating its willingness to invest beyond its core semiconductor business.

Despite these positive developments, investors remain focused on valuation risks rather than operational execution. After an extraordinary rally to record highs, expectations had become exceptionally elevated, leaving little room for disappointment.

The broad selloff across Asian semiconductor stocks has highlighted how fragile sentiment has become. While long-term AI demand continues to support Micron’s business outlook, the market is increasingly questioning whether the industry’s current growth trajectory and premium valuations can be sustained, suggesting volatility may remain elevated in the months ahead.

Micron Q3 2026 Earnings Report

Micron posted Q3 revenue of $41.46B against a $35.69B estimate and guided Q4 to $50B, blowing past a $43.24B consensus on surging AI memory demand.

Summary:

• Micron reported Q3 fiscal 2026 revenue of $41.46 billion against a consensus estimate of $35.69 billion, per company results
• Adjusted EPS came in at $25.11 versus an estimate of $20.49, according to the results
• Q3 adjusted gross margin reached 84.9%, ahead of the 81.9% estimate, per company figures
• Micron guided Q4 revenue to a range of $49 billion to $51 billion, well above the $43.24 billion Wall Street had expected, per company guidance
• Q4 adjusted EPS is forecast at $31.00 against an estimate of $25.50, according to guidance
• Q4 gross margin is guided to approximately 86%, above the 83.6% estimate, per company guidance
• The company cited customers’ rapidly growing demand as the driver behind the results and outlook

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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