The semiconductor stock market is getting highly exciting lately and one of its main stars Micron Technology (MU) is sharing big breakthroughs that catch global traders attention. For those of us actively tracking the AI sector movements, there are two super important fundamental updates that must be on our radar.
First, micron is officially accelerating a massive expansion worth ¥1.5 trillion or around $9.3 to $9.6 billion to scale up their factory in hiroshima japan. This is huge because this giant project to produce next generation high bandwidth memory (HBM) chips is fully backed by the japanese government with up to ¥500 billion in financial support. Shipments are targeted to start around summer 2028. This strategic move is highly crucial since it directly aims to supply high end AI chips like nvidia components. Interestingly, micron CEO sanjay mehrotra even highlighted that when american boldness meets japanese craftsmanship you get the best in the world.
The second positive catalyst comes from their financial performance. Based on the Quarter III Fiscal Q3 FY26 earnings report released by yahoo finance, micron successfully printed a performance that completely crushed wall street expectations or what we usually call a wall street beat.
Looking at the actual data, the earnings per share or (EPS) expected by the market was only at positive 20.7 but the reality successfully touched +25.1 which means there is a massive positive surprise of +$4.40. Meanwhile, the total revenue also managed to hit $41.46 billion with net earnings reaching $28.86 billion. This number jumped drastically thanks to the insane demand for server memory to feed AI data center infrastructure.
If we pull a long term investment line, Microns performance is actually mind blowing. On a year to date or (YTD) basis, the stock return has flown by +241.95 percent. Even if we count one year back, the total return reaches an incredible +703.27 percent which completely leaves the S&P 500 index behind since it only grew around +20.17 percent.
However, the chart has been turning red lately and corrected about -13.84 percent over the last 7 days. Why did this happen?
If we dissect the data from coinglass, the market is indeed experiencing short term selling pressure. Capital distribution recorded a net outflow of -$727.15 million with a total inflow of $16.01 billion versus an outflow of $16.73 billion driven by medium sized market players selling out. On top of that, daily short sale data also shows a quite significant volume spike right when the price hit its psychological resistance area above $1,200 and fell back down to the $975.56 range.
Technically on the daily chart or 1D, the recent -5.49 percent drop brings microns price close to its important support area. The good news is that the macro trend of this stock remains inside a strongly bullish track because the price position is still holding above the 50 day simple moving average or SMA 50 line located at the $852.09 level. Meanwhile, the stochastic indicator on the 5 3 3 parameter is currently starting to curve down into the oversold zone around the 41.50 and 25.25 numbers.
My Opinion
Looking at the combination of data above, my conclusion is pretty simple which is that this is a very healthy technical correction. It is completely normal for big institutions to take profit after a stock rallies hundreds of percent throughout the year.
Fundamentally, micron already has a foundation that is way too solid. The ammunition of secured long term contracts and the guaranteed production capacity from the hiroshima plant until 2028 and beyond is proof that this company is not just selling hype but actually has real growth.
For traders, a price drop into the area between the psychological level of $900 down to the 50 day moving average line around $852 is actually a very attractive zone to start watching closely again. The heavy short positions right now can even act as extra fuel to trigger a short squeeze scenario if a new positive sentiment pops up later to reverse the price direction. So we do not need to panic just yet because as long as the big trend is not broken this correction could instead be an opportunity to grab a discounted price before the next rally begins.
Source
- Whale Insider
- Coin Bureau
- Ministry of Economy Trade and Industry METI Japan Semiconductor Initiatives
Posted Using INLEO
