Micron Technology, Sandisk, and Western Digital Are Down Big in the Past Month. Is Now the Time to Buy?

The stock market is having a sale right now on memory and storage stocks. Many of the biggest, high-flying names that have been dominant on the market this year are all down big. Micron Technology (NASDAQ: MU), Western Digital (NASDAQ: WDC), and Sandisk (NASDAQ: SNDK) have all declined by more than 20%, with the largest declines on this list at over 36%.

Is this a great reckoning taking place in the industry, or is this just a brief pause before the next stage of the rally for these growth stocks? Here's a look at how much these stocks are down right now, how their valuations look, and if they could be good buys on the dip.

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Micron Technology

Micron has been iconic of the run-up in memory stocks this year, with its valuation at one point reaching nearly $1.4 trillion, making it among the most valuable companies in the world. That's around what electric vehicle maker Tesla is worth right now.

It's been a tremendous run for Micron, whose shares have soared more than 1,000% in five years. But in the past month, they're down roughly 24%. The big question is whether this is profit-taking or a sign of a greater bearish trend ahead.

Micron's fundamentals have been impressive as the company has generated an incredible $90 billion in revenue over just its past four quarters, and its profit during that stretch has totaled more than $50 billion. It was only a few years ago that the company was struggling to stay out of the red.

The boom in artificial intelligence (AI) has driven significant growth for the business. Trading at a lowly five times its estimated future profits (based on analyst expectations), the stock is an incredibly cheap-looking buy. But there is a risk: if the shortage in memory and storage products comes to an end and prices end up coming down, the party could be over. For investors who believe AI has unlocked a new normal in demand for memory and storage products, Micron's stock could still soar and be a good buy.

Western Digital

One stock that's down even more than Micron is Western Digital, whose products are known for their external hard drives and the excellent stability they provide consumers with. In the past month, the stock has fallen by 35%, but its five-year gains remain impressive at around 900%.

As more data is stored in the cloud, there's a greater need for backups and for the storage solutions Western Digital offers. It has been experiencing strong growth as well, but its numbers are nowhere near as impressive as Micron's. Revenue over the past 12 months has totaled $11.8 billion, and profits have also been excellent, totaling $6.4 billion.

Western Digital may be a bit less volatile in its growth, but it's also a more expensive stock to own, as it's trading at 25 times its estimated future earnings, which is a bit rich given that the S&P 500 average is a multiple of less than 22. This is a stock that may be due to go lower, as its growth hasn't been as strong as Micron's to justify its massive run-up in recent years.

Sandisk

Sandisk spun off from Western Digital last year, and since then, it's been scorching hot, with gains totaling close to 3,900%. It's an astounding return that has resulted in the stock now having a higher valuation ($206 billion) than Western Digital ($168 billion), the company it spun off from.

Its NAND flash memory has been in high demand as it's used in memory cards and USB drives. With such tremendous gains, however, it may not be surprising to learn that its losses are the most significant on this list, with Sandisk's stock falling 36% in the past month.

This business has turned around sharply from being unprofitable in recent fiscal years to now generating strong profit margins. The sudden and rapid improvement in its earnings due to rising prices, however, raises concerns about its dependence on and need for high prices to be profitable. That, combined with the stock also not being all that cheap, trading at 21 times its forward earnings, is a reason I wouldn't rush to buy Sandisk, even despite it trading lower of late.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology, Tesla, and Western Digital. The Motley Fool has a disclosure policy.