The stock hasn't been trading this low since early August.
The stock hasn't been trading this low since early August.
Has the bubble burst for Micron Technology (MU +4.47%)? That's what many investors may be asking right now, as the tech company, which has been experiencing significant demand for its memory and storage products over the past year, has suddenly fallen out of favor with investors. It's been falling sharply in recent days, and last week, it fell below $900.
It's now trading at levels it hasn't been at since August, and the concern is that this may be the beginning of an even greater decline ahead, particularly as the market has been growing concerned about an artificial intelligence (AI) bubble.
But with Micron trading at a low valuation with respect to profits, and demand remaining robust, is the market overreacting, and could Micron actually be a no-brainer buy while it trades below $900?
Micron's impressive growth attracts plenty of attention but also may be difficult to sustain
There's no denying Micron's results have been stellar in the past year. Not only has revenue been through the roof, but so too have earnings. The growth has been exceptional, making it little wonder why the stock has surged over 1,000% in the past five years. The big concern is whether the company can keep on generating such impressive growth in the long run.
MU Net Income (Quarterly) data by YCharts
The answer is not necessarily clear. While demand appears insatiable and prices for its products keep going up, there have been flags raised that a bubble may burst soon, with famed investor Michael Burry being one of the more prominent critics, believing that "the bubble in AI may burst sooner than later." Many investors, thus, may be heading for the exits and cashing out profits before that happens.
But is that a mistake?
The stock may be enticing for growth investors, but it's not a no-brainer buy
Averytin News Financial update.