Micron Stock Plunges 13% as AI Spending Concerns Mount, June 07

Micron Technology MU dropped 13.25% to $864.01 USD on June 6, its worst day since April 2025. The selloff followed Broadcom’s earnings report, where CEO Hock Tan did not raise full-year AI semiconductor revenue targets. Retail investors may be selling to fund the upcoming SpaceX IPO. Despite strong guidance for 81% gross margins in fiscal Q3, the stock now trades 70% above fair value estimates, leaving investors wondering if the AI rally has peaked.

Why Broadcom’s Caution Sparked the Selloff

Broadcom released fiscal Q2 2026 earnings on Thursday evening without raising its full-year AI semiconductor revenue forecast. This triggered a sector-wide reassessment of whether AI data center spending is beginning to plateau. For Micron, which depends heavily on AI-driven memory demand, the signal raised concerns that the transformational supercycle may be slowing. The stock fell 13% on Friday, marking the largest one-day decline in over a year.

Retail Investors May Be Cashing Out for SpaceX

BNP Paribas strategist Greg Boutle noted that Micron was the most-bought stock by retail investors over the past month. The upcoming SpaceX IPO may be forcing these investors to sell profitable positions to raise cash. Boutle stated that retail investors with profits but limited cash may need to liquidate holdings to participate in the highly anticipated SpaceX listing, creating downward pressure on Micron shares.

Valuation Concerns Loom Despite Strong Guidance

Micron guided to approximately 81% gross margin in fiscal Q3, signaling confidence in AI-driven demand. However, analysts at Simply Wall Street peg fair value at $507.88 USD per share, suggesting the stock is 70% overvalued at current levels. The company reported annual revenue of $58.1 billion USD and net income of $24.1 billion USD. With a price-to-earnings ratio of 40.74 and Meyka rating the stock a B+, the data points to limited upside from current prices.

Historical Dips Have Rewarded Patient Buyers

Micron has experienced 21 drops of 20% or more since 2010. Of those, the stock was higher a year later 16 times, with a median return of 30%. However, buyers typically endured a median further drawdown of 25% before recovery. The median time to peak return after a dip was 334 days. This history suggests patience may pay off, but only for investors who can tolerate additional volatility and hold for over a year.

Final Thoughts

Micron’s 13% drop reflects real concerns about AI spending growth, not just temporary profit-taking. With Meyka rating the stock B+ and fair value estimates 70% below current prices, the risk-reward appears unfavorable near-term despite the company’s strong margins and AI exposure.

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