Micron Technology (MU) has been a big winner for most of 2026—but in recent weeks a downturn in memory and storage stocks has almost sent Micron into bear market territory. MU stock is down 16% in the last month and, despite a price bump in today's trading, currently sits about 30% off all-time highs.
However, there’s at least one school of thought that indicates that Micron may be a great buying opportunity right now. Wedbush Securities points to the fact that ASML (ASML), the Dutch company that has mastered extreme ultraviolet (EUV) technology for chip manufacturing, raised guidance as a positive signal for DRAM-making companies like Micron.
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Why is ASML such a bellwether company in the artificial intelligence and chip space? Let’s examine the connective tissue of these two companies and why ASML’s strong earnings report and positive guidance should tempt you to buy MU stock on the dip.
About Micron Technology
Micron is one of the biggest makers of high-performance memory and storage drives that are used in data centers, as well as personal computers, mobile devices, and automobiles. But it’s the company’s growth in the data center segment that is driving the stock higher in the last year.
Micron makes both NAND (long-term storage) and DRAM (short-term memory). And as the number of data centers increases to provide capacity for the skyrocketing demand of AI programs and products, Micron and other storage stocks have leapt in value. Even taking into account the 14% drop in the last month, MU stock is up 240% so far this year, and its market cap has topped $1 trillion.
www.barchart.comIn the third quarter of fiscal 2026 (ending May 28), Micron had $11.52 billion in data center revenue, up an incredible 653% from a year ago. Cloud memory revenue was $13.76 billion, up 307%.
Overall, Micron’s revenue for the quarter was $41.45 billion, a gain of 388% from last year. Net income of $28.24 billion was up an astonishing 1,400%, and earnings per share improved from $1.68 to $24.67.
“Micron’s record fiscal Q3 financial results and even stronger outlook for Q4 reflect the strategic value of memory in the AI era,” CEO Sanjay Mehrotra said.
The company issued guidance for revenue between $49 billion and $51 billion and EPS between $29.73 and $31.73.
Given all that, why is MU stock falling in the last month? Simply put, investors seem to be taking profits in anticipation that the demand for memory and storage will become a glut that oversaturates the market. The fears have hit most of the major names in the sector, including Western Digital (WDC), SanDisk (SNDK), Samsung (SMSN.L.IX), and SK Hynix (SKHY).
Here’s Where ASML’s Guidance Is Important
Now let’s look at ASML and why its recent earnings report is a positive for Micron and others in its space. ASML is unique in that it’s the only company that manufactures commercial EUV lithography systems. While deep ultraviolet (DUV) technology uses components and lenses to focus tiny light beams to make semiconductor chips, ASML’s EUV technology uses mirrors instead of lenses and allows it to perform tasks that are beyond DUV technology.
ASML reported second-quarter earnings on July 15, reporting revenue of 9.32 billion euros ($10.64 billion), up 21% from a year ago. It forecast third-quarter sales between 11 billion euros and 12 billion euros and increased full-year guidance to a range between 43 billion euros and 45 billion euros. Previously, ASML had projected full-year sales of between 36 billion euros and 40 billion euros.
Management also announced it is planning to increase its Low-NA EUV capacity by 30% in 2027 and is considering increasing it by another 30% in 2028. The company plans to make a similar expansion to its DUV immersion capacity.
"Ongoing AI-related investments and continued progress in AI technologies are driving demand for advanced logic and memory chips, further strengthening the semiconductor industry's growth outlook,” CEO Christophe Fouquet said. “Our customers, in turn, continue to accelerate their capacity expansion plans.”
Wedbush Securities analyst Matt Bryson wrote in a note to clients that the capacity expansion plans are a positive signal to memory and storage companies.
"We view the increased 2027 outlook (and potential increase in 2028 EUV builds) as consistent with the strong demand we are seeing for both leading-edge logic and DRAM to support AI builds," he wrote. "And, the timing of increased shipments fits our view that higher spend in 2027 will ultimately lead to increased output in late 2027/early 2028 (for memory in particular), albeit we are less certain when supply will ultimately match demand given continued growth in spend."
MU Stock Is a Buy at a Discount
Now priced at a considerable discount, MU stock is an appealing buy right now. The median price target from 40 analysts is $1,492, representing a potential 56% upside in MU. Analysts have a consensus “Strong Buy” recommendation, with 36 of them recommending investors buy the stock and the other four with more moderate “Hold” recommendations.
The recent dip in MU shares seems to be a deep overreaction, coupled with some investors taking profits from a stock that’s been a high-flyer all year. ASML’s commentary and guidance are clear indicators that chipmakers are increasing, rather than decreasing, capacity and that there will continue to be strong demand for memory and storage for the foreseeable future.
www.barchart.com On the date of publication, Patrick Sanders did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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