On Tuesday, investors returned to semiconductor stocks, ending a month-long slump in the sector. Micron Technology shares jumped more than 12%, pushing the company back to a $1 trillion valuation. Another volatile session may follow on Wednesday.
Micron shares lost some ground in premarket trading, falling 2.4%. It is unclear if this trend will continue. Still, investors are focused on whether Micron can hold onto its $1 trillion market cap.
Micron has benefited from the AI investment boom, with Big Tech companies driving up demand for memory and data storage. However, risks are still high because valuations are stretched and it is uncertain how much higher chip prices can go. The stock has dropped 20% in the past month, even after rising nearly 800% over the past year. Wall Street still expects the company to stay strong.
As Big Tech earnings season continues, three reports expected on Wednesday could influence how investors feel about Micron. Alphabet will report after the market closes. Some investors worry that if Alphabet announces better chip efficiency, it could lower demand for memory. On the other hand, a strong AI forecast from Alphabet could support Micron’s role as a top choice for memory demand.
Tesla, which has been growing its AI business along with its electric vehicle operations, could also provide important insights for Micron when it reports after the market closes. IBM is the third company investors are watching. Many of IBM’s recent challenges are linked to enterprise customers moving from software and mainframes to AI hardware like chips.
