Is Micron Technology Stock Running Out of Steam?

Memory and storage stocks have been on a tear in 2026, with Micron Technology (NASDAQ:MU) perhaps the most emblematic of that rally. This year, the stock crossed $1 trillion in market cap, making it among the most valuable companies in the world.

Micron's business has been growing at an incredibly fast rate, as not only has demand been robust, but a shortage in the industry has enabled the company to raise prices, giving its top line a boost from not just more products sold but also higher prices.

The company's growth has been exceptional, and growth investors have been loading up on the stock. Year-to-date, it's up around 260%. But lately, the stock's been trading sideways and has struggled to get back to the highs it reached a few months ago. Could this be a sign that it's running out of room to rise higher?

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Trading volumes are down significantly

Micron's stock crossed above the $1,000 mark last week again, but it remains down nearly 20% from its 52-week high of $1,255. Many investors may be taking out profits; the stock's five-year gains are now around 1,300%. Micron's had a very good run over that time frame.

Another factor that may indicate waning excitement in the stock is a significant decline in trading volume.

MU 30-Day Average Daily Volume data by YCharts

Average trading volumes haven't been this low since around early April, and that was right around the time Micron's stock started to take off. Back then, it was worth less than $400. It may be a sign that investors don't see a major catalyst in either direction to push the stock much higher or lower.

I wouldn't buy Micron's stock for this reason

Micron may look cheap with respect to earnings -- its price-to-earnings multiple is 23, which is slightly lower than the S&P 500 average of 24.

However, the reason I'd steer clear of it today is that there is simply too much optimism priced in for demand to remain exceptionally high, for the shortage to continue for multiple years, and for big tech to continue spending heavily on memory and all things related to artificial intelligence. It's an overly bullish scenario that leaves no margin for error. If any cracks appear in the growth story, then Micron's stock, which has historically been cyclical and gone through these types of booms and busts in the past, could be due for a sharp decline.

Investors who remain invested should tread carefully with Micron's stock because its seemingly low earnings multiple can create a false sense of security and safety for what's historically been a highly volatile stock.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.