Micron Technology's stock price experienced a significant drop on Tuesday, temporarily erasing approximately $100 billion in market value. However, chip bulls chose to buy on the dip.

The stock recorded its worst single-day performance in over a year at one point. Subsequently, bargain-hunting capital entered the market, transforming a near-crash scenario into the latest stress test for the AI memory sector.

Fresh supply concerns helped fuel Micron's rebound.

A labor standoff at Samsung, risking an 18-day strike, could impact memory chip production capacity, further supporting the market's rationale for buying Micron on weakness.

Micron has become a bellwether for the AI memory trend. Tuesday's intense volatility indicates that trading capital remains willing to bet on the chip scarcity narrative and has not exited the sector.

At this juncture, candlestick chart patterns hold significant reference value. In particular, the shadows (also known as tails or wicks) can clearly show the price levels of the battle between bulls and bears and the support/resistance zones.

On Monday, Micron formed a bearish evening star candlestick pattern: the stock faced selling pressure above $800, a typical potential bearish signal following a substantial prior rally.

However, Tuesday's price action completely reversed that signal: after sellers pushed the price down into the $700 range, buyers stepped in forcefully, resulting in a long lower shadow. This is a clear technical signal of heavy bargain-hunting.

The broader chip sector released a similar signal simultaneously:

The Philadelphia Semiconductor Index (SOX) also staged a strong rebound from Tuesday's lows. Leading companies such as NVIDIA, Broadcom, Texas Instruments, Analog Devices, ON Semiconductor, and Seagate either hit new all-time highs on Tuesday or rebounded sharply near record levels.

Even semiconductor stocks driven more by thematic speculation continued to attract capital.

Shares of silicon carbide chipmaker Wolfspeed continued to surge after Citrini Research expressed optimism about its growth potential, once again confirming that risk appetite in the semiconductor sector has not receded.

Micron's year-to-date gain still exceeds 170%, remaining less than 1% below the all-time closing high set on Monday.

Key for the future outlook:

If the $700 range holds, Tuesday's sharp decline was merely a short-term shakeout. However, a break below $700 could transform this stress test into a more significant concern for the entire chip sector's uptrend.