Since the start of the week, the shares of Micron Technology (NASDAQ:MU) were down 13.7% as of 10:34 a.m. ET on Friday, according to data provided by S&P Global Market Intelligence. The decline in the stock price was due to the market selling off this week after the Federal Reserve raised the federal funds rate to help control upward pressure from inflation.
Some investors worry that higher interest rates could push the economy into a recession, which could put pressure on consumer PC demand. Micron is a leading supplier of solid state memory and storage drives.
Micron has already received two downgrades from analysts in June due to concerns about the near-term direction of consumer demand. Consumer device products accounted for 55% of Micron’s portfolio in 2021.
Earlier this week, Summit Insights analyst Kinngai Chan downgraded the stock to a buy. His call was based on industry channel checks that suggest slowing demand for smartphones and a continued decline in PC sales in the near term. PC shipments fell 5% year-over-year in the first quarter, according to market researcher IDC.
Investors with a long-term mindset have a good opportunity to buy the stock at a favorable valuation. Analysts typically make their calls based on near-term business trends, but Micron benefits from secular demand trends in data center, artificial intelligence, automotive and other industrial markets that are expected to fuel growth for several years.
At the company’s recent Investor Day presentation in May, management noted that segments of its consumer-focused product portfolio will drop to 38% of 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%.
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John Ballard holds positions in Micron Technology. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.