Micron Technology Falls 7.7% as Broadcom Sparks Chip Selloff, June 05

Broadcom’s disappointing AI chip forecast on June 4 triggered a sharp selloff across semiconductors. Micron Technology dropped 7.7% to $996, erasing $100 billion in market value. The selloff signals investor concerns that AI-driven chip demand may be slowing and valuations have stretched too far. Meyka rates the stock B+ with a 12-month target of $218.20, suggesting significant downside from current levels.

Broadcom’s Weak Forecast Triggers Sector Rout

Broadcom shares fell 12.6% after the company issued AI chip revenue projections below market expectations. The selloff spread quickly through the semiconductor industry, with more than $650 billion wiped from chip company valuations. Micron fell 7.7% to $996 from a prior close of $1,079.57, marking one of the steepest single-day drops for the memory chip maker.

Asian Markets Follow With Steep Declines

The selloff extended into Asian trading on June 5. South Korea’s Kospi index dropped 5.1% to 8,199.44, with SK Hynix plunging 8.6% and Samsung Electronics falling 5.4%. Japan’s Nikkei 225 slipped 1.3% to 66,573.85 as Tokyo Electron fell 7%. Hong Kong’s Hang Seng declined 1.2% to 24,948.96. The broad retreat reflects investor concerns about AI sector sustainability across the region.

Sector Rotation Away From Expensive Tech

The market shift represents a rotation out of expensive technology stocks into defensive blue-chip names. The Dow Jones climbed 1.73% to a record 51,561.93, while the S&P 500 edged up 0.4% to 7,584.31. The Nasdaq Composite fell 0.09% to 26,830.96. Money flowed into healthcare and financial stocks, with UnitedHealth Group surging 5% and JPMorgan Chase rising 3%.

Micron’s Valuation Pressure and Analyst View

Micron trades at a 47.2 price-to-earnings ratio, well above historical averages, after climbing 865% over the past year. Analyst consensus remains bullish with 75 buy ratings versus 5 holds and no sells. However, Meyka’s B+ grade and $218.20 annual price target imply 78% downside from the current $996 price, reflecting concerns about stretched valuations and slowing AI demand growth.

Final Thoughts

Micron’s 7.7% drop reflects broader chip sector concerns about AI demand sustainability and elevated valuations. With Meyka rating the stock B+ and targeting $218.20 annually, the risk-reward tilts sharply toward downside despite analyst buy consensus.

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