Micron Stock Looks Cheap, but This Downturn Is "Unprecedented"
Memory chips are, for the most part, commodities. When you manufacture commodity products, how much you can charge is largely based on supply and demand. When demand outstrips supply, prices and profits for manufacturers go up.
That's the story of Micron (NASDAQ: MU) during much of the pandemic. Soaring sales of PCs and devices, persistent demand for server memory, and supply chain constraints put the memory chip industry into a state of undersupply. In the fiscal year ended Sept. 2, 2021, Micron produced net income of $5.86 billion on $27.71 billion of revenue.
Shares of Micron have tumbled more than 40% this year, partly because the stock market has taken a beating, and partly because the memory chip markets have reversed course. Memory chips are now in oversupply, and prices have been falling fast.
Source Fool.com
