Why Micron Stock Skyrocketed Last Month But Is Plummeting in July

Micron (NASDAQ: MU) booked another month of monster gains in June, rising 18.9% across the month. Meanwhile, the S&P 500 fell roughly 1.1%%, and the Nasdaq Composite declined 2.8%.

Micron stock saw big gains in the lead-up to its quarterly report on June 24 amid strong demand indicators for the artificial intelligence (AI) memory chip market, and the company's blowout results for the third quarter of its 2026 fiscal year prompted another big valuation surge. On the other hand, the company's share price has come under pressure since hitting its post-earnings high.

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Micron served up another stellar earnings report last month

After the market closed on June 24, Micron published results for fiscal Q3 2026 -- a period that ended on May 28. The business posted sales of $41.46 billion in the period, far exceeding the average analyst estimate's call for revenue of $35.84 billion. For comparison, the business had recorded sales of $9.3 billion in the prior-year quarter.

Non-GAAP (adjusted) earnings per share came in at $25.11, also blowing past the average Wall Street target's call for an adjusted profit of $20.78 per share. In addition to strong sales and earnings beats in fiscal Q3, Micron also delivered guidance that crushed expectations.

The company expects to record roughly $50 billion in revenue in the current quarter, and the average analyst target prior to quarterly report had targeted sales of roughly $43.58 billion. Thanks to the strong fiscal Q3 report and very impressive guidance for the current quarter, Micron stock rocketed higher in early trading following the quarterly release -- but shares have subsequently been hit with sell-offs as investors moved to take profits and reacted to shifting views on AI stocks.

Here's why Micron stock is losing ground in July

As of this writing, Micron stock is down roughly 19.6% from the lifetime high that it reached last month. The company's share price has fallen roughly 4.3% in July's trading heading into Friday's market open.

Investors have been selling out of AI chip stocks and moving funds back into artificial intelligence software plays, and Micron has seen a valuation contraction in conjunction with the trend. News that Meta Platforms is gearing up to launch an AI processing service for third parties has also contributed to the pullback.

With Meta launching its own AI compute business, investors see the move as an indication that the tech giant has excess compute capacity. That could have some significant implications for the broader AI market and chip stocks in particular.

Massive spending from tech giants like Meta has helped to fuel huge growth for leading providers of AI hardware and powered massive valuation gains for Micron and other top players. While the demand outlook for memory chips remains very strong, investors have been making trades based on indications that the AI hardware market could be in the early stages of meaningful shifts.

Keith Noonan has positions in Micron Technology. The Motley Fool has positions in and recommends Meta Platforms and Micron Technology. The Motley Fool has a disclosure policy.