What happened

Shares of STMicroelectronics (NYSE:STM) fell 12.7% in June 2017, according to data from S&P Global Market Intelligence.

So what

STMicro's pain started on June 8, as a widely circulated research note from analyst firm Goldman Sachs conjectured that high-tech stocks were overvalued in general and well overdue for a big correction. The report led to large negative trades on many high-flying tech stocks. The effect will probably last until the next earnings season rolls around next week, filling the gaps in Goldman's argument with real-world data.

As one of the largest semiconductor specialists in the world, and a direct supplier to many of the other plunging tech businesses, STMicro felt the heat.

A bear behind stacks of coins (illustrating the concept of a bear market)

Image source: Getty Images.

Now what

STMicroelectronics was more open to a correction than most of its peers, because the stock has been on an absolute tear over the last year. Even after June's big drop, shares have gained a staggering 165% over the last 52 weeks and are trading at 43 times trailing earnings.

Before you write STMicro off as just another overvalued hype machine, note that it's a turnaround story with brightening prospects. As the company wades deeper into hand-picked target markets such as the Internet of Things and automotive computing, analysts currently peg STMicro's valuation at an eminently reasonable 15 times forward earnings. I would not be surprised to see this stock picking up steam again, no matter where the tech giants in are going next.

Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.