History Suggests Micron Stock Will Crash and Take Decades to Recover. Is This Time Different?
Key PointsMicron has largely benefited from increased pricing for conventional DRAM and NAND.
Micron Technology (MU) has become a popular stock among retail investors due to its strong growth and affordable valuation, while institutional investors have become increasingly cautious. Cathie Wood of Ark Investment Management recently warned about Micron, noting that memory cycles can be "viscous" and that competition from China could eventually disrupt the market.
History suggests that Micron's stock could see a crash, with recovery potentially taking decades. In 2000, Micron's stock surged parabolically before crashing, and it took roughly two decades for the stock to recover. This year, Micron's stock has seen a similar parabolic rise, but the question remains whether this time will be different than past memory cycles.
Micron derives 73% of its revenue from DRAM and 26% from NAND, both of which have seen soaring prices due to high demand from AI infrastructure. While the current memory cycle is being driven by high demand for AI chips, conventional memory prices are putting Micron at risk due to its exposure to ordinary DRAM and NAND prices. While AI chips and longer-term contracts make some elements of the memory cycle different than past ones, increased DRAM and NAND supply from China could lead to a big drop in conventional memory prices and a crash in Micron's stock, similar to the 2000 crash.
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