Micron (MU.US) performance day affects global technology stocks! Stocks plunged by 13% before earnings report, with options market betting on Micron's intense volatility not yet over.

On Tuesday, Micron Technology, Inc. (MU.US) experienced a single-day stock price plunge of 13%, and the options chain for June 26th behind the stock price trajectory is being priced. By Friday when the options expire, the stock is expected to experience another drastic volatility. Prior to this, on the Tuesday before the earnings release by this American storage chip manufacturing giant, the stock price dropped over 13% to around $1,051 at the closing, boasting an astonishing 270% increase this year. On Tuesday, the hot AI computing power infrastructure theme stocks that have led global stock markets to repeatedly hit new highs this year collectively plummeted, causing a significant global market downturn. This was referred to as a "Black Tuesday" as concerns about the bursting of the "AI bubble" reignited. Speculative forces around high leverage strategies and investors focusing on high-frequency short-term trading have been rapidly moving out of crowded positions in AI computing power related technology stocks this year while waiting for further positive developments in peace talks between the US and Iran. The benchmark Korean stock index, the Korea Kospi Composite Index, plunged over 9% and triggered a circuit breaker for 20 minutes as market concerns grew about the overextended rise of the two major storage chip giants that account for 50% of the index Samsung Electronics and SK hynix. In the US stock market, fears about leveraged funds unwinding positions in the Korean market and a repricing panic of overvalued AI computing power sector spread to the US, with the Nasdaq 100 index plunging by 3.3% and the Philadelphia Semiconductor Index falling by around 8%. However, the Dow Jones Index showed resilience, with defensive sectors such as consumer staples, REITs, healthcare, and utilities rising against the tide. Market attention is now turning to Micron Technology, Inc., the American storage chip manufacturing giant, which will announce its quarterly results and future outlook on Wednesday (Thursday morning Beijing time). This will be a crucial test for whether the AI computing power infrastructure spending can support its strong upward momentum and whether the unprecedented rise of global AI computing power-related technology stocks this year can be sustained. With the current high valuation and crowded positions in the AI computing power infrastructure sector, investors are anxiously awaiting Micron Technology, Inc.'s earnings announcement on Wednesday. A signal of strong demand for AI computing power and continued high capital expenditure on AI-related technology could boost market confidence and support the continuation of the AI bull market. "In particular, short-term risks faced by regional popular AI chip stocks concentrated in Asia mainly include market structure, increasing instability in crowded positions, and fears of a possible sharp volatility in Micron after the US market closes on Wednesday. In addition, concerns about the unprecedented AI computing power infrastructure investments by US mega cloud service providers are intensifying," noted David Savage and Macro Squawk, senior strategist from Bloomberg Strategists. Micron's stock price plunged over 13% before earnings, options market bets on another 13% volatility Close-to-the-money straddle options indicate an implied volatility of about $139 by the end of this week's trading day, roughly equivalent to a 13% swing up or down from its current trading level at the close on Wednesday. The 1050 straddle options are priced at about $139.40, while the 1060 and 1070 straddle options are slightly higher than $139. This puts the rough range of Micron's stock price after earnings in the options market at around $920 to $1,200; considering the stock's previous drastic reset before earnings, this wide range is particularly noteworthy. Furthermore, there is still strong interest in buying calls above the current stock price, indicating that traders are not ruling out the possibility of a price rebound. Over 11,000 contracts of the 1100 calls have been traded, and nearly 10,000 contracts of the 1200 calls. The open interest for the 1050 calls is also significant, reaching 16,500 contracts, making this strike price one of the most important levels in the options chain. On the put side, there is also active trading, indicating that the positioning and setup of the options chain are not purely based on buying on dips. Over 5,500 contracts of the 1000 puts have been traded, with open interest exceeding 8,400 contracts; close to 4,000 contracts of the 1050 puts have been traded. As the stock has been sold off in recent days, put premiums have surged, with the near-the-money level of 1050 to 1070 put options rising by roughly 180% or more. This indicates that while bullish sentiment is strong, the market is also actively hedging against the possibility of Micron's earnings disappointments or weak future growth guidance leading to a bearish sell-off, with traders buying protective options at high prices to guard against further price declines. Micron's earnings report is highly anticipated, "AI super bull market" faces a major test For the third quarter, Wall Street analysts unanimously expect Micron to report earnings per share of $20.57 and revenue of approximately $35.25 billion, representing a year-over-year surge of 1000% in earnings per share and a potential 279% growth in revenue. Over the past two years, Micron has surpassed analyst expectations by 100% in both revenue and earnings per share. Citigroup, the Wall Street financial giant, recently significantly raised its target price and future earnings forecasts for Micron Technology, Inc., believing that the super cycle in the DRAM/NAND storage market is still strongly continuing and that Micron's price upside potential far exceeds previous expectations. Citigroup raised Micron Technology, Inc.'s target price from $840 to $1,200, maintaining a "buy" rating with a whopping 40% upward revision. At the same time, Citigroup's analyst team increased the earnings per share forecasts for Micron for the fiscal years 2026 and 2027 by 4% and 10% respectively, with the 2027 fiscal year earnings per share forecast at $114.73, approximately 4% higher than the market consensus. Citigroup also raised its revenue and earnings per share forecasts for Micron for the third quarter of the 2026 fiscal year by 6% and for the fourth quarter by 5%. The expected year-over-year earnings per share growth for the third quarter was revised from 1025% to 1092% based on more optimistic expectations for DRAM/NAND memory chip pricing. According to Citigroup's latest forecasts, Micron's core earnings per share for the fiscal year 2026 is expected to be $60.73, rising further to $114.73 for the 2027 fiscal year and $117.83 for the 2028 fiscal year. In terms of revenue, Citigroup predicts that Micron's revenue will reach $115 billion for the 2026 fiscal year and further increase to $197.5 billion for the 2027 fiscal year. The significant expansion of profit margins particularly reflects the high leverage effect of rising memory chip prices on Micron's overall profitability. Citigroup projects that Micron's gross profit margin will expand significantly from 39.8% in fiscal year 2025 to 76.9% in fiscal year 2026, further rising to 82.9% in fiscal year 2027. Whether it's Alphabet Inc. Class C's massive TPU AI computing power cluster or the massive NVIDIA Corporation AI GPU computing power cluster, they both rely on fully integrated HBM storage systems carrying AI chips, coupled with the current tech giants accelerating new or expanding AI data centers requiring large-scale purchases of server-level DDR5 memory and enterprise-level high-performance SSD/HDD; Samsung Electronics, SK hynix, and Micron Technology, Inc. are crucially positioned in these three core storage areas HBM, high-performance server DRAM (including DDR5/LPDDR5X), and high-end data center-level SSD they are the most direct beneficiaries in the "AI memory + storage stack," enjoying the "super dividend" from the AI infrastructure wave. GPUs are responsible for generating intelligence, HBM/DRAM for high-speed feeds, enterprise-grade NAND/eSSD for hot data and caching, while HDD for long-term storage of massive cold/warm data. Therefore, Citigroup and Goldman Sachs Group, Inc. believe that the AI computing power arms race led by cloud computing giants is turning storage chips from cyclical commodities into scarce strategic assets. The price hikes in DRAM/NAND in 2026 are not the end but possibly the initial stage of a super cycle.