A high growth company with 82% YoY growth trading at an EV/Sales of 4.9x
Image
1. Introduction
$Micron Technology(MU)$ designs and sells memory and storage products.
With the need for more and more data on the rise, there is an increased demand for storing that data.
These solutions are critical for applications in gaming, AI, cloud computing. Industries all with huge tailwinds.
2. Revenue
Revenue growth has been on the rise recently thanks to rising DRAM demand.
More chips and being sold and each successive chip crams more memory into each chip. The winner here is always $MU.
Whether $NVIDIA Corp(NVDA)$ or $Advanced Micro Devices(AMD)$ or $Intel(INTC)$ dominate the AI war, $Micron Technology(MU)$ will always win.
Image
3. Opportunities
At the macro level, the semiconductor industry is recovering which is leading to a growth in demand for data centers and all AI advancements, of which $Micron Technology(MU)$ is a key beneficiary.
The product roadmap for $Micron Technology(MU)$ is also exciting with technology advancements coming as early as 2025 in both DRAM and NAND units.
CapEx will be up but this should fight off the intensifying competition and increase market share in an industry with huge tailwinds.
4. Risks
For me, there is a supply demand cyclical trend in the memory storage industry and I do believe this alone will bump the $Micron Technology(MU)$ price up a lot.
However, the big risk is competition from the likes of Samsung and SK Hynix. Both are expanding production along with further subsidies in South Korea of $19 billion.
There's a big competition risk.
5. Valuation
Comparing multiples to Samsung, $Micron Technology(MU)$ doesn't looking that exciting...but $Micron Technology(MU)$ is stronger, and of course listed on the NASDAQ which generally will lead to a higher multiple anyway.
However, ignoring competitors we are seeing a multiple contraction despite:
- Booming revenue growth
- Margin expansion
- Macro positivity
I think $Micron Technology(MU)$ at these levels is a good play.
Image
Comments