Micron's (MU -0.66%) stock closed at a record high of $1,255 per share on June 25, 2026. Today, the memory chipmaker's stock trades at about $1,030 per share. Let's see why it pulled back 18% -- and if investors should rely on its historical performance to see what happens next.
Micron is usually a cyclical stock
Micron is one of the world's largest producers of DRAM and NAND (flash) memory chips. For decades, the memory market has gone through boom-and-bust cycles.
Image source: Getty Images.
Memory chipmakers typically ramp up their production when the growth of certain markets (PCs, servers, mobile devices, or vehicles) causes demand to outstrip supply. But those supply shortages eventually turn into supply gluts when they produce too many chips.
That's why Micron's stock has endured some steep peak-to-trough drawdowns over the past decade (73% from 2014 to 2016, 55% in 2018, 43% in 2020, 51% in 2021, and 36% in 2024) whenever the memory market cools off. Based on those historical downturns, Micron's 18% decline over the past four months could merely be the beginning of a deeper pullback.
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But Micron could buck that trend this time
Micron's past cyclical declines were painful, but past performance isn't a reliable indicator of future gains or losses. That's because the explosive growth of the generative AI market over the past two years has fundamentally changed the bullish thesis for Micron's stock.
Starting in 2024, the AI boom created an insatiable demand for high-bandwidth memory (HBM) chips, which are paired with Nvidia's (NVDA -0.52%) data center GPUs in AI clusters, and for NAND-powered enterprise solid-state drives (SSDs) to store and transfer all that data.
Manufacturing HBM chips also requires three times the wafer capacity as the production of a standard DRAM chip, so Micron's increased production of HBM chips throttled its own supply of DRAM chips for the PC, mobile device, and server markets. That imbalance -- which its larger competitors Samsung and SK Hynix (SKHY -0.86%) have also been grappling with -- drove up memory prices across the board and amplified the market's current growth cycle.
The bulls believe those AI tailwinds will significantly lengthen Micron's current growth cycle. From fiscal 2026 (which ended in September) to fiscal 2028, analysts expect its revenue and EPS to grow at CAGRs of 55% and 67%, respectively, as the AI boom continues. Based on those estimates, its stock still looks surprisingly cheap at six times this year's earnings.
While Micron's stock might eventually suffer a steeper pullback, investors shouldn't rely on its historical data to predict its future growth. For its current cycle, the AI catalysts could drive its stock much higher before the market's supply finally catches up to its feverish demand.
