Micron Stock Plunges 28% in a Month: Should You Hold or Exit?

Core Viewpoint - Micron Technology, Inc. has experienced a significant decline in stock price, dropping 27.8% over the past month, underperforming both the Zacks Computer and Technology sector and major semiconductor players [1][4]. Company Performance - The company's non-GAAP gross margin fell to 37.9% from 39.5% in the previous quarter, driven by weaker NAND flash pricing and startup costs at a new DRAM production facility [6]. - For the third quarter, Micron guided for a gross margin of 36.5% at the midpoint, indicating continued margin pressures [7]. Long-Term Outlook - Despite short-term challenges, Micron's long-term growth prospects remain strong, with expected year-over-year revenue growth of 29% and a 153% increase in EPS if third-quarter targets are met [8]. - The Zacks Consensus Estimate predicts revenue growth of 41% for fiscal 2025 and 30% for fiscal 2026, with EPS improvements of 427% and 58%, respectively [9]. Strategic Positioning - Micron has a strong history of beating earnings estimates, with an average surprise of 10.7% over the last four quarters [10]. - The company is well-positioned in high-demand segments such as AI, data centers, automotive, and industrial IoT, benefiting from the increasing demand for advanced memory solutions [11]. - Micron's diversification strategy reduces reliance on consumer electronics, focusing on stable sectors to mitigate revenue volatility [12]. Technological Advancements - The company is advancing in high-bandwidth memory (HBM) products, crucial for AI workloads, with notable developments in AI-optimized memory solutions [13]. - Micron is a key supplier for NVIDIA's GeForce RTX 50 Blackwell GPUs and plans to open a new HBM advanced packaging facility in Singapore by 2026 [14]. Valuation - Micron is currently undervalued, with a forward 12-month Price/Sales (P/S) ratio of 1.86X, significantly lower than the sector's 5.06X and major competitors [15][16]. Conclusion - The recent sell-off in Micron's stock reflects short-term headwinds, but the long-term growth story remains compelling, making it a prudent choice for investors willing to navigate near-term volatility [18].