Barron: Here’s What Can End Micron’s Stock Pain

Micron Technology

MU 0.50%... has been suffering from a

reversal of its recent momentum, but earnings and a bit of political help might put a stop to the bleeding.

The shares were down sharply in early trading, before paring losses somewhat and finishing down 0.5% to $848.95 on Friday. That was coming after Thursdays 5.7% loss. The stock has declined 13% this week amid a broad chip selloff, with shares down 27% this month.

The memory-chip maker closed below the $1 trillion market cap threshold on Thursday for the first time since June 5, according to Dow Jones Market Data.

As of Fridays close, Micron had a market value of $958.8 billion, according to Dow Jones Market Data. The company marked a peak closing market cap of $1.37trillion on June 25.

Arguably very little has changed about the fundamental picture for Micron with memory prices continuing to rise.

Wall Street still expects Micron earnings to increase for the next three years at least amid higher artificial-intelligence spending and it now trades at a forward price-to-earnings ratio of less than six times according to FactSet.

I dont think the memory [stocks] look unattractive post this pull back as a trade. The question is if they can double again from here on a 3-5 year basis, said Ivana Delevska, portfolio manager of the Spear Alpha ETF

| SPRX 0.89%.

The first factor that could help Micron would be increased capital expenditure guidance from Big Tech companies this earnings season, starting with Google-parent Alphabet GooGL 2.17%.. on Wednesday next week.

That would reassure investors about demand.

However, there is an open question about rising supply, especially from Chinese memory-chip companies such as ChangXin Memory Technologies (CXMT 688825-.-%A).

While they are currently limited in their ability to supply

U.S. companies and more advanced forms of hardware, there has been consistent speculation American customers might lobby to be allowed to buy from CXMT in the face of the shortage.

However, members of the U.S. House of Representatives are pushing back against that possibility. John Moolenaar (R., Mich.) and George Whitesides (D-CA) wrote a letterto Commerce Secretary Howard Lutnick which was made public this Thursday calling for more explicit curbs on U.S. companies buying from CXMT or its peers.