While investors are concerned about a memory peak, analysts say the stock still looks cheap relative to various earnings scenarios
Micron's stock continued its decline on Thursday.
Micron Technology has become one of the hottest stocks over the past year - and given its size, profitability and customer relationships, it is become ever more critical to the overall market.
Analysts at Trivariate Research went so far as to call the memory-chip maker $(MU)$ "the most important stock in the market" in a Thursday note. They called out its role as "a proxy for the AI cycle and risk-taking."
But while Micron investors were once riding high, lately the pathway has been rocky. Micron shares are down 30% from their June 22 peak. In recent weeks, the stock market has had to make do without momentum from memory and other highflying chip stocks that had driven lofty first-half gains.
Micron has been benefiting from price hikes that have boosted earnings per share exponentially. Some of the recent pressure on shares stems from concerns about when pricing power will moderate. Given Micron's market relevance, should investors worry?
Not so fast, according to the team at Trivariate. Micron shares were trading above $900 when they published their note, implying a multiple of less than 11x normalized earnings per share. "This seems low to us for the only US producer of a critical product in the AI supply chain," the analysts wrote.
Micron shares are trading below $850, meaning the multiple is even lower. The stock closed below its 50-day moving average on Wednesday, marking the first time that has happened since April 7, according to Dow Jones Market Data.
The Trivariate analysts modeled 10,000 possibilities for Micron's earnings per share through the eventual top then downturn of the AI cycle "to gauge reasonable potential assumptions" for the company's future earnings power.
In a scenario where the memory cycle returns to trading as a commodity and the downturn is twice as slow as it has been historically, the analysts modeled peak EPS to be $194, and $156 in the bear case. They concluded that "the consensus view of $178 appears to underestimate peak EPS relative to our forecasted distribution of outcomes."
Shares are trading at a low multiple, "particularly if earnings don't quickly and massively erode from the peak," the analysts said.
The upbeat take from Trivariate wasn't enough to stem the bleeding, however. Micron's stock was down 6.6% on Thursday afternoon, while fellow NAND flash memory maker Sandisk $(SNDK)$ also saw its shares sink more than 12%.
The PHLX Semiconductor Index SOX was down 5% Thursday afternoon.
Since hitting a record high of $14,634.72 on June 22, all 30 components of the SOX have moved lower, according to Dow Jones Market Data, with Marvell Technology $(MRVL)$ being the worst performer, down 36% from that point. Among the SOX components, only 13.3% are above their 50-day moving average as of Thursday, according to Dow Jones Market Data.
A report from Reuters on Tuesday said that AI neocloud CoreWeave (CRWV) is looking to potentially use financial derivatives to protect against an eventual decline in prices for memory and storage chips. That could be one development weighing on Micron shares recently.
Evercore ISI analyst Amit Daryanani said investors were likely taking the report "as a sign that memory prices may be approaching a peak."
However, constraints for both dynamic random-access memory and NAND "will likely worsen" at the end of this year, and continue through most of next year, he said in a Wednesday note, citing supply chain checks and commentary from original equipment manufacturers.
-Britney Nguyen
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(END) Dow Jones Newswires
July 16, 2026 14:01 ET (18:01 GMT)
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