TradingKey - Micron Technology (NASDAQ: MU) is down 5.63% to $878.84 on Friday, October 16. It is currently about 28% down from its record close of $1,213.56 on June 25. However, it is still up a phenomenal 385% from last year.
My take is that this selloff is more due to competitive and labor risk than fundamental breaks. Chinese CXMT is targeting Micron's profitable server DRAM. Meanwhile, Micron's largest production base in Taiwan is facing union pressure. The Taoyuan union is holding a rally in Taipei today (October 19), that is non-strike in nature.
The Fundamentals Remain Exceptionally Strong
The latest quarter, Fiscal Q4 2026, was Micron's best quarter ever. Revenues came in at a record $54.2 billion, which is a 31% sequential increase and a 379% increase year over year. Non-GAAP EPS came in at a record $33.42. Gross Margin also came in at an all time high at 87% for the quarter.
Guidance is also looking very good. For Fiscal Q1 2027, Micron expects revenues of $61.5 billion with a non-GAAP EPS of $38.15. Management also stated that gross margin for Fiscal Q1 2027 will be roughly 86.25%, and that it would represent the lows for the year.
HBM: Sold Out and Priced Higher
High-bandwidth memory is the stacked memory that is used in AI accelerators. For calendar year 2027, Micron has signed contracts for the large majority of its HBM supply, and has charged substantially higher prices than the previous year for those contracts.
I find this to be the most compelling point for the bull case. It gives Micron very visible revenue for 2027, and management anticipates memory constraints will persist through calendar 2028.
Why the Stock Is Falling: CXMT Targets Server DRAM
At a conference in Shanghai on October 9-10, CXMT’s President stated they plan to release a DDR5 server memory module based on a 4F² cell design by year-end. According to TrendForce, CXMT captured 9.5% of DRAM revenue in Q2 2026, compared to Micron’s 23.3%.
I am focusing on the target. CXMT aims at server DRAM, not HBM, and DRAM made up 73% of Micron's fiscal Q4 revenue. But planned launches don't always mean volume production. According to Goldman Sachs, the market has overestimated how quickly CXMT will catch up with advanced memory.
Taiwan Labor Risk Is Escalating
Micron's DRAM and HBM rely heavily on Taiwan. Earlier this month, over 99% of the Taoyuan union members' votes supported a strike mandate. The unions in Taoyuan and Taichung are pushing for a 15% profit-sharing plan from the operating profit.
No strike date has been set, and the Taichung union has a mediation on October 22. From a labor perspective, a permanent formula for profit-sharing would negatively affect the profit margin. From a supply perspective, a strike could disrupt supply.
Capital Returns Are Set to Rise
Micron's board raised its buyback authorization to $35.16 billion, allowable starting December 9. Management expects to hit its targeted cash level by the end of fiscal Q1, and will increase buybacks from that point. Micron also agreed to pay Netlist $600 million to settle all of its litigation with them, paid at $30 million per quarter over five years.
Net Capex is expected to run at about $25 billion for the first half of fiscal 2027. Post selloff, the stock is trading at around 12x its reported fiscal 2026 earnings.
Micron Technical Analysis: MU Slides Toward $856.69 Support After Breaking Long-Term Trendline
On my 4-hour chart, MU closed at $878.70, down 1.75%, with overnight quotes up at $897.81. Price broke below the rising trendline that supported the leg up from April, after gapping down from $972.76 last week. Price failed to hold above $1,107.66 during most of September and early October. This has clearly negated the March uptrend and favors selling.
Micron Stock Price Chart - Source: Tradingview
The moving averages, which were previously supporting, are now beginning to roll over, adding to the selling pressure.
The RSI is at 26.65 and is firmly in oversold territory. Bearish momentum is strong but readings this stretched often see a quick recovery before the larger trend resumes. Immediate resistance is at $972.76, with the 4 hour trendline and $982.37 and the $996.80 moving averages being the next levels of resistance. The 4 hour trendline, at $856.69, would provide initial support with the June low at $738.72 being the next major support. I am bearish MU as long as it is trading below $972.76.
Key Levels
Last Close: $878.84, down 5.63% on October 16
Support: $856.69, $738.72
Resistance: $972.76, $982.37 to $996.80, $1,030.76
RSI: 26.65, below its 34.16 signal line
Bullish trigger: 4-hour close above $972.76
Bearish trigger: 4-hour close below $856.69
FAQs
Why is Micron stock falling despite record results?
Micron announced record results and issued guidance for Q1 to $61.5B, but the street is still worried about CXMT’s plans to enter server DRAM as well as increased union activity in Taiwan.
What is the Micron stock forecast this week?
The bias is bearish below $972.76. A close below $856.69 targets $738.72, while a close above $972.76 opens $996.80 to $1,030.76.
Bottom Line
Micron's results were record breaking, but with competition and labor risk in Taiwan, the market is betting against Micron. If SK hynix reports healthy results on October 28th and memory pricing stays firm, Micron could see an upside rebound toward $972.76. DRAM pricing could be peaking and if CXMT wins business in servers, this could also hurt Micron. The bearish target is a close below $856.69 and the bullish target is a close above $972.76.
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