Micron Fell 7% on Tuesday. Is This an Opportunity to Buy?
A semiconductor sell-off hit Micron hard, but investors shouldn't be too nervous.
Overview
A broad semiconductor sell-off was the driving factor behind Micron's (NASDAQ: MU) 7% fall on Tuesday, Aug. 18. Investor nerves regarding extraordinarily high AI spending among tech companies and rising Treasury yields hit memory chip manufacturers hard. Micron wasn't alone as rivals Sandisk and SK Hynix each dropped 9% or more. Western Digital also fell 5%. The question now is whether investors should see this as an opportunity to buy a rare dip.
The pullback this week puts Micron's stock nearly $300 below its 52-week high of $1,255. I really think this is a great opportunity for investors on the sidelines to buy in. First, the sell-off was a broader reaction, perhaps even an overreaction, to macroeconomic conditions and emotions. None of the decline was directly attributable to news regarding Micron's actual business.
Details
Secondly, Micron's fundamentals are incredibly strong right now. Revenue, as of its latest quarterly earnings, was more than $41 billion, almost double what it was the prior quarter. Management expects revenue to top $50 billion in the next earnings report. The company's gross margins are around 85%.
Source
Originally published at www.fool.com.