Time for Micron Technology (MU) stock to shine ? Read & decide.
Midday surprise.
I could not have anticipated US market behaviour on Wed, 20 Dec 2023 around mid-afternoon onwards.
This was because US’s December 2023 — Consumer Confidence report released painted a “rosy” picture. (see below)
Consumer confidence index increased from November 2023’s 101.0 to December 2023’s 110.7.
This marked December’s reading the highest level since April 2023.
At the same time, both Present situation index & Expectations index also rose in December 2023, to 148.5 (from 136.5) and 85.6 (from 77.4) respectively.
Overall, the December Consumer Confidence report indicates:
A significant boost in consumer sentiment, fueled by easing recession fears & a positive view of the job market,
Increased spending intentions.
Inflationary concerns remain a key issue for consumers.
The report when digested helped to fuel the market higher in the early trading hours.
This was why the “out of the blue” abrupt nosedive caught me on the wrong foot.
It also ended Wall Street's impressive rally, largely driven by:
The Fed keeping interest rate status quo for December 2023.
Falling treasury 10-year interest rate fell to 3.9%.
Advanced anticipation of Fed fund rate downwards adjustment.
The Fed’s dovish turn during FOMC’s December 2023 press conference.
All three major US stock indexes veered lower late in the session to end 1.3% to 1.5% below Tue, 19 Dec 2023's close:
Dow Jones: -1.27% (-475.92 to 37,082.00).
S&P 500: -1.47% (-70.02 to 4,698.35). 500 index’s decline was the steepest since 26 Sep 2023 and there were 36 new 52-week highs & 1 new lows.
Nasdaq: -1.50% (-225.28 to 14,777.94). Its decline was the biggest 1-day drop in 8 weeks. Tech index registered 210 new highs & 89 new lows.
Possible cause of market “plunge”:
Market speculated that expiring zero-day options traded Wed, 20 Dec 2023 accelerated the selloff as options dealers sold more to rebalance their positions before expiration.
After being “blind-sided” by the market yesterday, how should retail investors (like me) navigate?
I will still defer to official reports out today, that could still influence US market’s Thu, 21 Dec 2023 performances:
US weekly jobless claims report.
US Q3 2023 Gross Domestic Product (GDP) 3rd estimates readings.
For $Nike(NKE)$ quarterly earnings, its effect will have to wait, when trading resumes on Fri, 22 Dec 2023.
This is because Nike’s results will be released after the market has closed.
Question: Is it time for the small guy?
2023 is the year of the semiconductor stocks; lead by leader $NVIDIA Corp(NVDA)$ when its artificial intelligence (AI) chip became the most in-demand.
Thereafter, the 2nd and third inline peers / competitors (eg. $Advanced Micro Devices(AMD)$ & $Intel(INTC)$) began to hog the limelight.
When $Micron Technology(MU)$ released their quarterly earnings on Wed, 20 Dec 2023, it feels as though the small guy is finally getting the attention it deserves?
Micron Technology (MU) Q1 FY2024 Highlights:
Market Capitalization: $90.69 billion.
Revenue: $4.73 billion versus analyst estimates of $4.63 billion (2% beat).
EPS (non-GAAP): -$0.95 versus analyst estimates of -$1.01. (see below)
Revenue Guidance for Q2 2024 is $5.3 billion at the midpoint, above analyst estimates of $5.05 billion. YoY, it grew by +15.7% .
Free Cash Flow was -$333 million compared to -$758 million in the previous quarter.
Inventory Days Outstanding: 158, down from 172 in the previous quarter
Gross Margin (GAAP): -0.7%, down from 21.9% in the same quarter last year.
Micron Technology closed -4.24% lower on Wed, 20 Dec 2023; in tandem with overall US market performance.
However, its YTD performance has gained +56.22%.
Impressive if it’s looking at Micron performance by itself. Compared with its Top 3 peers’ YTD returns, it is a shade weaker.
CEO’s outlook for 2024.
Micron Chief Executive, Sanjay Mehrotra reported the followings in a news release:
He expects business fundamentals to improve throughout 2024, with record industry TAM (total addressable market) projected for 2025.
Micron’s industry-leading chip — High Bandwidth Memory for data center AI applications is proof of Micron’s strength in technology and product road maps.
Micron is well positioned to capitalize on the immense opportunities artificial intelligence is fueling across end markets.
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Do you think US market will continue to consolidate before attempting to scale higher?
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