Unpacking the Latest Pullback in Micron Stock

Some investors are worried that Micron and other semiconductor stocks won't enjoy the AI spending boom for long.

But there's little evidence right now that large tech companies are backing away from massive AI capex spending.

If you look around at semiconductor stocks lately, you'd think there was something terribly wrong with the industry. Many stocks have fallen hard over the past weeks, including shares of Micron Technology (NASDAQ: MU) , which are down 27% since mid-June.

But the drop isn't tied to problems in Micron's business and is instead being fueled by broad investor skepticism about artificial intelligence (AI) spending.

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Honestly, the sell-off appears more like a knee-jerk reaction than a true assessment of Micron's opportunities. Here's why.

Micron's decline began shortly after the company released its results for the fiscal third quarter (ended May 28), in which sales increased 345% to $41.5 billion and earnings per share spiked more than 1,200% to $25.11.

Instead of being satisfied with such impressive results, investors began worrying that the massive spending spree from tech companies that's currently underway will eventually slow down, and that Micron's growth is unsustainable as a result.