{"id":441662,"date":"2026-11-05T23:40:06","date_gmt":"2026-11-05T16:40:06","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/memory-names-getting-smoked-micron-breaks-the-july-low-in-12-drop-441662\/"},"modified":"2026-11-05T23:40:06","modified_gmt":"2026-11-05T16:40:06","slug":"memory-names-getting-smoked-micron-breaks-the-july-low-in-12-drop","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/memory-names-getting-smoked-micron-breaks-the-july-low-in-12-drop-441662\/","title":{"rendered":"Memory names getting smoked: Micron breaks the July low in 12% drop"},"content":{"rendered":"
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Shares of Micron have taken an ugly turn today, dropping 12% and breaking support at the July low.<\/p>\n

Chip stocks are down heavily as the market re-thinks the pace of the AI build out. There are a few reasons for the change in thinking:<\/p>\n

    \n
  1. The election showed US voters are heavily against data centers, with 40 of 41 direct votes on them failing and many candidates who were pro-data center losing<\/li>\n
  2. The market initially rewarded the hyperscalers for those votes, showing that stock prices will improve if they slow spending<\/li>\n
  3. Various reports show it will be impossible to power the pace of building data centers<\/li>\n
  4. If data centers can be built, public opposition will result in higher costs because companies will have to pledge to build all the power infrastructure to go with them, essentially moving them off grid<\/li>\n<\/ol>\n

    The flip side of the argument is that Micron is making tremendous amounts of money right now and the order book is deep. The actual result for FY26 was\u00a0$74.33 per shares, and that puts it at 9.3x this year’s earnings. Moreover, the consensus rises to $177 for the fiscal year that just started so just 4x earnings. The consensus rises to $212 for 2028 but I wouldn’t weigh that too heavily.<\/p>\n

    For what it’s worth, the company has said\u00a0the industry will be more supply-constrained in both 2027 and 2028 than in 2026. For HBM, they said a large portion of output is sold. Micron also said at the end of the quarter that more than 75% of production is committed.<\/p>\n

    Notably,\u00a0Micron is trying to diminish its traditional cyclicality. It has\u00a0signed 26 strategic customer agreements, expected to cover more than 35% of cumulative revenue through 2030. Approximately 75% of that revenue has defined pricing arrangements, primarily floors and ceilings. These agreements are multiyear take-or-pay contracts.<\/p>\n

    Despite that, there is some major variance in analyst revenue estimtes for the next two years.<\/p>\n<\/p>\n

    The next thing to watch is the chart, it’s ugly. Today’s break of the July low cuts through support and puts it back at May levels.<\/p>\n

    Another data center buildout darling — Caterpillar — has already turned negative on the year after rising 86% YTD in late June. The market could be seeing technical changes coming from advanced models that need less memory, or this could be about the buildout.<\/p>\n<\/p>\n

    Another possibility — which I put a high weight on — is that this is an irrational, emotional market. It’s filled with fast-money options traders that trade on momentum. There is little thought given to earnings except on earnings data. After that, it’s all an AI sentiment trade and right now there is an ebb in AI sentiment.<\/p>\n

    That said, I do think those earnings numbers are grounded in reality and it’s hard to see a total cliff before 2029. That should make something like 3x next year’s earnings akin to an absolute floor and that’s around $530. There is also some support at $661, which was the mid-May low.\u00a0<\/p>\n

    Micron’s next earnings report is likely to be in mid-to-late December.<\/p>\n

    This article was written by Adam Button at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

    Shares of Micron have taken an ugly turn today, dropping 12% and breaking support at the July low. Chip stocks are down heavily as the market re-thinks the pace of the AI…<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-441662","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/441662","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=441662"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/441662\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=441662"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=441662"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=441662"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}