Micron Technology, Inc. (NASDAQ: MU) Recent Sell-Off Is Unwarranted

December 11, 2017, 15:12 pm ET, BY Simon M.- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

Micron Technology, Inc. (NASDAQ: MU) recently suffered a massive sell-off that led to the stock losing about 15% of its value. However, I believe that this decline was a slight correction aligned with overall trends among tech stocks and that Micron still remains a high growth company.

Article Summary

Micron recently suffered a major sell-off where it lost 15% of its previous value.

The sell-off was replicated among most technology stocks trading on the NASDAQ.

The company has strong fundamentals, which bodes well for its future.

Here’s the trading report on MU.

The company’s latest earnings results for the fourth quarter of fiscal 2017 indicated that all its business divisions were reporting double digit growth in revenues. This is an indicator that the company has strong underlying fundamentals, which is what leads me to the assertion that the recent sell-off is not part of a long-term downtrend.

Technology stocks, which make up a significant portion of the NASDAQ, including Intel Corporation (NASDAQ: INTC), Western Digital Corp (NASDAQ: WDC) and Advanced Micro Devices, Inc. (NASDAQ: AMD), have all experienced a similar correction. The recent correction could be attributed to massive rally that most technology stocks have experienced, which could have led to overbought conditions, as the NASDAQ Composite hit a high of 6,912.35 on November 28.

A deeper look at Micron’s business units reveals that its compute & networking business units reported fourth quarter revenues that were more than double the third quarter revenues. The revenues for this business unit are likely to keep growing as the company mentioned increasing demand from cloud services providers such as Amazon.com, Inc. (NASDAQ: AMZN).  

Micron’s mobile business unit and its storage business unit also reported significant revenue growth in the last quarter. Growth in the mobile business units was largely driven by increasing demand for its NAND devices, while growth in the storage business unit was attributed to increasing market share of Micron’s SSD units.

Other factors that support the bull case for Micron’s future include the fact that the computer and electronic devices industry has been on a strong uptrend after bottoming in the first quarter of 2016. Given that the iShares S&P NA Tec. Semi. Idx. Fd. (ETF) (NASDAQ: SOXX) is still on an uptrend, this bodes well for Micron and other semiconductor manufacturers’ future performance.

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