What happened
Week to date, shares of Micron Technology (MU 4.89%) were down 13.7% at 10:34 a.m. ET on Friday, according to data provided by S&P Global Market Intelligence. The drop in the share price was due to the broader market sell-off this week after the Federal Reserve raised the federal funds rate to help control the upward pressure in inflation.
Some investors are worried that higher interest rates will send the economy into a recession, which could pressure demand for consumer PCs. Micron is one of the leading suppliers of memory and solid-state storage drives.
NASDAQ: MU
Key Data Points
So what
Micron has already received two analyst downgrades in June over concerns about the near-term direction for consumer demand. Products for consumer devices made up 55% of Micron's portfolio in 2021.
Earlier this week, Summit Insights analyst Kinngai Chan downgraded the shares to a hold from a buy. His call was based on industry channel checks that suggest slowing smartphone demand and a continued decline in PC sales in the near term. PC shipments declined 5% year over year in the first quarter, according to market researcher IDC.
Now what
Investors with a long-term mindset have a good opportunity to buy the stock at a bargain valuation. Analysts generally make their calls based on near-term business trends, but Micron is benefiting from secular demand trends in the data center, artificial intelligence, automotive, and other industrial markets that should fuel growth for several years.
At the company's recent investor day presentation in May, management noted that consumer-focused segments of its product portfolio would drop to 38% of the business by 2025. Data centers will remain one of the company's fastest-growing and largest addressable markets, with products for this market expected to grow from 30% of the company's portfolio to 42%.
