What Happened?

A number of stocks jumped in the morning session after dip buyers returned to the market to capitalize on more attractive valuations following the sector's steep selloff in the previous week, driven by continued optimism surrounding the long-term artificial intelligence investment cycle. The recovery comes after a sharp decline that briefly pushed semiconductor powerhouses into bear market territory, marking their worst weekly drop in over a year. Despite recent market jitters regarding elevated valuations and questions over whether major technology firms will sustain their massive spending on AI infrastructure, underlying confidence in the AI-driven bull market remains intact. This renewed optimism triggered a broad rally across the globe. In Asia, major contract chip manufacturers and designers like Taiwan Semiconductor Manufacturing Company (TSMC) and MediaTek saw significant gains, jumping 3.2% and 9.9%, respectively. The positive momentum carried over into U.S. markets, where premarket futures pointed higher and industry gauges tracking semiconductor performance surged over 4%. Furthermore, a strong start to the corporate earnings season, with a vast majority of early reporters topping Wall Street estimates, provided additional macroeconomic tailwinds. Investors are now closely monitoring upcoming U.S. technology earnings reports for further validation of the semiconductor sector's growth trajectory.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Processors and Graphics Chips company Intel (NASDAQ: INTC) jumped 7.2%. Is now the time to buy Intel? Access our full analysis report here, it’s free.
• Semiconductor Manufacturing company KLA Corporation (NASDAQ: KLAC) jumped 4.4%. Is now the time to buy KLA Corporation? Access our full analysis report here, it’s free.
• Semiconductor Manufacturing company Lam Research (NASDAQ: LRCX) jumped 4.6%. Is now the time to buy Lam Research? Access our full analysis report here, it’s free.
• Semiconductor Manufacturing company Marvell Technology (NASDAQ: MRVL) jumped 7.1%. Is now the time to buy Marvell Technology? Access our full analysis report here, it’s free.
• Memory Semiconductors company Micron (NASDAQ: MU) jumped 9.8%. Is now the time to buy Micron? Access our full analysis report here, it’s free.

Zooming In On Micron (MU)

Micron’s shares are extremely volatile and have had 60 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 1 day ago when the stock gained 3.2% on the news that the company could repurchase more than 40% of its outstanding stock by 2028, sparking a rebound alongside a broader rotation back into semiconductor stocks, according to UBS. The investment firm expected Micron to generate over $400 billion in free cash flow through 2028. While the chipmaker was restricted from buying back stock until December 2026, UBS noted the company could allocate all free cash flow toward repurchases once the restriction lifted. Adding to the positive sentiment, Alger executive vice president Ankur Crawford stated that Micron's earnings power was underappreciated during a CNBC interview. Crawford estimated the company could generate cash flow equal to roughly 30% of its current market value over the subsequent 18 months. The stock's rise also reflected a wider market rotation back into artificial intelligence and memory trades following a recent sell-off. Reassuring investors about underlying industry fundamentals, KeyBanc analyst John Vinh pointed out that memory shortages remained persistent. Demand for the computing power required to run AI systems continued to be strong, helping Micron stabilize and attract buyers after pulling back from a recent peak.

Micron is up 207% since the beginning of the year, but at $969.20 per share, it is still trading 16% below its 52-week high of $1,154 from June 2026. Investors who bought $1,000 worth of Micron’s shares 5 years ago would now be looking at an investment worth $12,556.

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