Semiconductor Frenzy Returns: Micron Shares Surge 12%, Can It Conquer the $1,000 Mark This Week?

TradingKey - Micron's stock price surges close to $1,000; can it break through this key level this week?

On July 21, Eastern Time, the U.S. semiconductor sector staged a strong rebound once again, with the Philadelphia Semiconductor Index rising over 5%, and AMD ( AMD) and Intel ( INTC) both surged over 8%, while Micron Technology ( MU) soared over 12% to close at $970.82, hitting a near half-month high. With the stock price just a stone's throw away from the $1,000 psychological barrier, the market is holding its breath to see if Micron can sustain its rally and conquer the $1,000 mark in one fell swoop this week.

On June 25, Micron's stock price surged to an intraday record high of $1,255. Subsequently, Micron's stock price fell all the way, dropping to $797 on July 17, hitting its lowest level since May 25 this year, resulting in a maximum drawdown of up to 36%. So, why did Micron's stock price experience such a major pullback recently?

The recent continuous decline in Micron's stock price does not represent a breakdown in the company's fundamentals, but is rather the result of a combination of multiple market psychology and cyclical factors: First, the recent tech and semiconductor sectors have been affected by macroeconomic data, the Federal Reserve's policy direction, and adjustments in tech giants' capital expenditure strategies, leading to capital outflows; second, the memory industry is inherently highly cyclical, and the market is beginning to worry that high growth and high prices will face 'oversupply' after large-scale expansion; third, Micron's previously announced earnings report showed record-high revenue and net profit, but this also means that the future baseline has been set extremely high, and the stock's massive surge over the past year has accumulated a large amount of profit-taking pressure, prompting short-term investors to lock in profits.

After the recent pullback, Micron has shaken out some profit-takers and short-term investors, and selling pressure has been partially released. However, market doubts triggered by the macroeconomy and tech giants have not been fully resolved, which also means that this rebound for Micron and the semiconductor sector is merely a turning point within a downward trend, and a second leg down remains possible in the future.

This week, U.S. stocks usher in a super earnings week, with Tesla ( TSLA ), Google ( GOOG ), IBM ( IBM ), Texas Instruments ( TXN) and Intel ( INTC) among other tech companies reporting earnings. The capital expenditure on AI infrastructure they announce will be the lifeblood for Micron's HBM3e/HBM4 and high-capacity DDR5 orders. If capital expenditures are maintained or increased, it will support Micron's future business revenue; otherwise, it will deal a blow and weigh on its stock price.

Currently, Micron's stock price stands at $970, touching the Fibonacci retracement level of 0.382, which acts as the first rebound resistance. A breakout could see it rise to the next target level of 0.5, corresponding to a stock price of $1,030, representing about a 6% upside from the current price. If tech earnings can alleviate market concerns, Micron's stock price could break through the $1,000 psychological barrier in the next couple of days.

Micron stock chart, Source: TradingView