Micron Technology (NASDAQ:MU) staged a dramatic intraday reversal on Thursday, recovering from a steep early-session decline as investors focused on the company's upgraded earnings outlook rather than broader weakness in the storage sector. The stock, which had fallen as much as 7.3% to a low of $827.83, climbed back to $897.00 by 12:52 EDT, up 0.4% from the previous close.
The recovery added approximately $79 billion to Micron's market capitalization from the session's trough, based on initial calculations using current share counts. This sharp bounce highlights the market's growing conviction that Micron's AI-driven memory business is decoupling from the wider storage industry's challenges.
Over the past three months, consensus forecasts for Micron's fiscal 2027 earnings per share have surged by 61%, from $95.82 to $154.67. The company's fourth-quarter fiscal 2026 EPS consensus also climbed 35.7% to $31.16. These upward revisions reflect strong demand for high-bandwidth memory (HBM) used in AI accelerators, as well as improving pricing power across DRAM and NAND products.
Micron now projects fourth-quarter revenue of approximately $50 billion, give or take $1 billion, with adjusted gross margin around 86% and adjusted EPS of about $31, plus or minus $1. CEO Sanjay Mehrotra emphasized that customer agreements are expected to boost earnings "durability and predictability," signaling a shift toward more stable, contract-based revenue streams.
The company's peers, however, painted a more cautious picture. Sandisk (NASDAQ:SNDK) and Western Digital (NASDAQ:WDC) both reported quarterly results that beat consensus estimates, but their stocks fell sharply as investors had priced in even stronger numbers. Sandisk's revenue came in 6.9% above analyst expectations, while Western Digital's adjusted EPS surpassed forecasts by 7.6%. Despite this, Sandisk shares were down 4.4% and Western Digital tumbled 10.9% by midday.
Sandisk CEO David Goeckeler touted the company's contract pipeline, describing it as "light years ahead" compared to three quarters ago, with eight deals worth at least $93.9 billion across six clients. Yet the market's muted reaction suggests that contract visibility alone is no longer sufficient to drive stock gains in the storage sector.
Analyst sentiment on Micron remains overwhelmingly bullish. According to the latest Wall Street Journal data, 43 analysts rate the stock a Buy, nine rate it Overweight, and four hold a Hold rating. No analysts have issued Underweight or Sell recommendations. Price targets range from $1,540 at J.P. Morgan (NYSE:JPM) to $2,000 at Susquehanna, implying potential upside of 72% to 123% from current levels.
KeyBanc's John Vinh noted that "memory shortages remain persistent," supporting the bullish case. However, the high level of consensus optimism also raises the risk of disappointment if future earnings revisions fail to keep pace with expectations. The stock's current valuation of about 5.8 times projected fiscal 2027 earnings appears modest, but it hinges on the sustainability of memory pricing and AI demand.
The next key catalyst comes on Monday, August 10, when Micron executives are scheduled to appear at KeyBanc's technology forum at 08:00 MDT. Investors will be looking for updates on HBM4 shipment progress, customer contract details, and the feasibility of the 86% gross margin forecast.
Risks remain, including the possibility that fiscal 2027 consensus estimates represent a peak in memory pricing. Increased supply, softening AI investment, or weaker contract enforcement could lead to significant profit declines. Thursday's mixed reactions from peers underscore that even solid earnings beats can disappoint the market if expectations have run too far ahead.
Micron's shares briefly traded at about 5.4 times projected fiscal 2027 EPS before recovering all losses. While one session does not confirm a valuation bottom, the stock's resilience amid sector-wide weakness suggests investors are increasingly viewing Micron as a pure-play beneficiary of the AI memory boom, distinct from the broader storage cycle.
