Tech selloff hits AI chip winners despite blowout demand — buy the dip on Micron
Thesis
Micron's earnings were a blowout — revenue quadrupled and they locked in $100 billion of AI memory demand. SanDisk and Western Digital rallied 13-15% on the news. Taiwan Semiconductor's strong earnings further confirm the AI infrastructure buildout is real and accelerating. Yet the very next day, a global tech sell-off dragged Micron, Nvidia, and SanDisk all lower. When a sector with proven, accelerating demand gets hit by broad market de-risking, the gap between price and fundamentals often closes quickly. The memory chip makers are the most directly validated by the earnings data, making them prime candidates for a snapback.
Strategy approach
Build a mean-reversion strategy on D1 timeframe. Enter long MU, SND, and WDC when: (1) each stock has dropped >5% over the prior 2 sessions, AND (2) the stock is trading above its 50-day moving average, AND (3) the 14-day RSI is below 35. Exit on a 5% gain or after 10 trading days, whichever comes first. Use a 7% stop loss.