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Shares of Micron Technology (NASDAQ: MU) have clocked impressive gains of 58% so far this year, but the past few weeks it's fallen, even though the company reported a solid set of fiscal 2024 third-quarter results (for the three months ended May 30) in late June.

More specifically, Micron stock has fallen about 14% from the 52-week highs it hit on June 18. Let's see why that has been the case and whether investors should use the dip to buy more shares.

Lofty Wall Street expectations are weighing on Micron Technology

Micron's recent quarterly results were stellar. The company reported a stunning 81% year-over-year increase in revenue to $6.8 billion. It also reported a non-GAAP (generally accepted accounting principles) profit of $0.62 per share as compared to a loss of $1.43 per share in the same quarter last year. The numbers exceeded Wall Street's expectations of $0.50 per share in earnings on revenue of $6.67 billion.

The company's outlook also slightly exceeded analyst estimates. Micron is expecting $7.6 billion in revenue in the current quarter and adjusted earnings per share (EPS) of $1.08. However, the forecast is barely above Wall Street's expectation of $7.58 billion in revenue and EPS of $1.02. According to some estimates, the memory specialist was even expected to deliver more than $8 billion in revenue.

Micron's lofty expectations can be attributed to the huge demand for its memory chips that power artificial intelligence (AI) graphics processing units (GPUs). The chipmaker's AI-specific, high-bandwidth memory (HBM) is being used by the likes of Nvidia, and the demand for this type of memory is so strong that Micron has sold out its entire capacity for 2024 and 2025.

The good part is that the robust demand for HBM will contribute strongly to Micron's revenue, increasing from "several hundred million dollars" in the current fiscal year to "multiple billions of dollars" next year, the company says. It is worth noting that HBM will present a solid long-term growth opportunity for Micron as the market for these chips is expected to grow at a scorching annual rate of 68% through 2030, generating annual revenue of almost $86 billion at the end of the forecast period.

More importantly, Micron's projected year-over-year growth for the current quarter indicates it is indeed benefiting handsomely from this opportunity. The company's top line is on track to jump 90% year over year in the fourth quarter of fiscal 2024. Its bottom line will also improve significantly compared to an EPS loss of $1.07 in the same period last year.

So, investors seem to be overreacting to Micron's latest results, especially considering the company has multiple AI-related catalysts beyond HBM that will help it post stronger growth in the current quarter. For instance, AI-enabled smartphones and personal computers (PCs) are likely to drive an increase in memory sales for Micron because each AI-enabled smartphone and PC carries higher memory content.

For example, Micron points out that the arrival of AI PCs will trigger an upgrade cycle. The good part is that each AI-enabled PC is expected to have 40% to 80% more dynamic random access memory (DRAM) than a traditional PC. At the same time, AI PC shipments are forecast to increase at an annual rate of 44% through 2028, opening a healthy long-term growth opportunity for Micron.

AI smartphones are also set to drive stronger memory demand. Micron says that AI-enabled flagship smartphones require a 50% to 100% increase in memory content compared to non-AI flagship smartphones released last year. Again, this is a solid growth opportunity for Micron as sales of AI smartphones could increase fourfold by 2027, according to Counterpoint Research.

These lucrative growth drivers indicate why a big surge is expected in Micron's earnings going forward.

MU EPS Estimates for Current Fiscal Year data by YCharts. EPS = earnings per share.

Buying the stock looks like a no-brainer after its pullback

The outstanding earnings growth that Micron is forecast to deliver means investors are getting a good deal on the stock right now. It is trading at just 15 times forward earnings, significantly lower than the Nasdaq-100's forward earnings multiple of 29 (using the index as a proxy for tech stocks).

The sales multiple of about 6.8 also presents a nice discount to the U.S. tech sector's average of 8.3. Savvy investors, therefore, should consider using this tech stock's recent drop as a buying opportunity. Catalysts such as AI are likely to help it deliver impressive long-term growth, which could result in more stock market upside.

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. 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.