Why Micron Stock Plummeted This Week
Key Points
Micron stock moved lower this week as investors reduced exposure to growth-dependent AI plays.
Despite bearish momentum in this week's trading, UBS significantly increased its one-year price target on the stock.
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Micron (NASDAQ: MU) stock got hit with a big pullback in this week's trading. Compared to where it stood at the end of the previous week's trading, the company's share price declined 16%.
The pullback for Micron over the last week occurred amid a 2% drop for the S&P 500 and a 2.7% drop for the Nasdaq Composite. The sell-off occurred even as one high-profile investment firm issued a substantial price-target increase for the stock.
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Micron stock sank as investors moved out of AI stocks
Debate about whether artificial intelligence (AI) stocks are in a valuation bubble has played a major role in shaping recent market moves and spurred sell-offs early in this week's trading. In addition to shifting outlooks on the Federal Reserve's next move on interest rates, Nvidia's third-quarter report played a significant role in shaping moves for Micron this week.
Nvidia published its third-quarter results after the market closed on Wednesday, and the AI leader delivered another report that arrived with better-than-expected sales, earnings, and forward guidance. While Nvidia's results initially spurred gains for Micron and other AI stocks in Thursday's trading, investors turned bearish later in the session.
AI stocks then saw recovery momentum Friday as investors ramped up bullish bets on renewed expectations that the Federal Reserve will cut interest rates next month.
One analyst became increasingly bullish on Micron
On Thursday, UBS published new coverage on Micron that maintained a buy rating on the stock and significantly increased its price target on the stock. UBS raised its price target on Micron from $245 per share to $275 per share, citing favorable demand trends. Micron's high-bandwidth-memory (HBM) solutions have seen impressive demand tailwinds in conjunction with the rise of AI data centers, and UBS thinks that this catalyst will allow the company to post strong growth.
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Keith Noonan has positions in Micron Technology. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
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