What happened

Shares of Micron Technology (NASDAQ:MU) fell as much as 11.1% lower on Thursday morning, following a few negative analyst reports. The memory chip maker's stock recorded these lows near 11 a.m. EDT. An hour later, Micron shares had recovered slightly to an 8.8% drop.

So what

Analyst firm Baird no longer calls Micron a "top idea," lowering its price target from $100 to $75 per share. That's still more than 40% above Micron's current prices, and Baird analyst Tristan Gerra still holds an "Outperform" rating on the stock, but he sees the positive market cycle for both DRAM and NAND memory chips peaking right about now.

Meanwhile, Morgan Stanley's Asian technology team confirmed that DRAM and NAND prices are about to start dropping.

"We recently met buyers and sellers of memory and believe that the 4Q outlook for server DRAM is worse than we previously expected along with the prospects for the rest of memory in 3Q," stated Morgan Stanley analyst Shawn Kim.

Finally, Deutsche Bank analyst Sidney Ho agreed that the memory market might be peaking but also argued that the upcoming downturn already appears to be priced into the stock. Deutsche also kept its "Buy" rating intact with a stable $80 price target.

A loose pile of broken microchips.

Image source: Getty Images.

Now what

Micron is currently trading at 5 times trailing earnings or 4.3 times forward earnings estimates, lending support to Deutsche Bank's optimistic attitude. At the same time, we Micron shareholders never like to see unit prices dropping amid an imbalance between chip supply and market demand.

The next few months could get rough, assuming that the oversupply situation deepens. If you like to play the market-timing game -- which isn't necessarily a good idea, mind you -- this could be a good time to bail out of Micron until the pricing cycle turns back up again.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.