Micron's Lows are a Warning Sign

Micron Technology (NASDAQ:MU) is a leading semiconductor stock that tech investors must watch. Despite favorable valuations of 13.7 times P/E and sub-8 times forward P/E, the stock is at around the $70 low.

Why?

Micron posted revenue of $8.27 billion, up 36.5% Y/Y. The gross margin was 47.9%, up from 34.9% last year. Despite net income more than doubling to $2.78 billion, markets worried about Micron’s Q1 guidance.

Micron expects Q1 revenue of $7.45 billion to $7.85 billion. EPS of $2.00 to $2.20 is below the analyst consensus of $2.48.

Micron blamed shipment declines for both DRAM and NAND for the weaker outlook. Some PC customers are paring purchases because of shortages of non-memory components. MU stock could rise as its PC customers wait out the shortage in the coming months.

Micron stock is cheap enough for investors to get a big margin of safety. Still, sentiment for technology remains weak and getting worse. Investors will sell MU stock and expensive stocks indiscriminately. This gives value investors a better entry point in the coming weeks.

Fundamentally, the chip shortage limits the growth in the PC refresh. Specifically, that Windows 11 requires new PC builds is a tailwind. Yet the market cannot respond to the demand, with limited supply.

Accumulate Micron stock on weakness.