Nvidia crashes to pre-AI prices while Micron builds $9B factory — contrarian bou
Thesis
Nvidia has shed roughly $1 trillion in market cap in under two months, pushing its price-to-earnings ratio back to levels not seen since before AI captured the market's imagination. Yet the underlying demand for AI chips hasn't slowed — if anything, it's accelerating. Micron's massive $9.3 billion Japan factory expansion is concrete proof that the AI infrastructure build-out is still in its early innings, and Micron is being flagged as a top AI pick on Wall Street. Meanwhile, contrarian traders are already betting on an Nvidia rebound even as the broader chip sector sells off. When a dominant market leader becomes as cheap as Nvidia is now while the end-market demand story strengthens, it historically sets up a powerful recovery rally.
Strategy approach
Build a mean-reversion strategy that enters long NVDA on H4 when the stock is oversold (price > 2 standard deviations below 20-day VWAP) and MU is simultaneously making a 5-day high. Exit on 8% gain or 4% loss, max hold 14 days.