Micron: Buy the Chip or Miss the Dip ?
Micron Technology - Buy Now?
There’s a saying “Good things come to those who wait”.
When it comes to $Micron Technology(MU)$, it is true now more than ever.
It has been like that for this semiconductor company, compared to trailblazers like $NVIDIA Corp(NVDA)$ and to a lesser extent $Advanced Micro Devices(AMD)$. (see below)
Look at the 3 semiconductor stocks (Nvidia, AMD & Micron) past year performance,
Micron is in Red and Nvidia is in Purple.
All 3 stocks have been trending upwards with the leader Nvidia rising (floating) way above the other 2 stocks by a wide margin.
Micron’s 2023 performance was almost flatline. Things began to turnaround only after mid February, 2024.
It helped that its latest Quarterly earnings met Wall Street’s demanding expectations.
Q4 2023 earnings report.
Revenue: came in at $5.82 billion. This is +57.72% gain YoY from 2022’s $3.69 billion.
Net Income: was $793 million. A big plus compare to YoY net loss of $2.3 billion in Q4 2022.
Earnings per share (EPS): was $0.42 cents adjusted vs -$0.25 cent loss expected by LSEG, formerly known as Refinitiv.
Other catalysts?
(1) Company Outlook.
Management is optimistic about demand for it’s “high bandwidth memory” (HBM) ie. memory chips that are used for AI servers, including inside Nvidia’s H200 graphics processing units.
Micron’s HBM is already sold out for calendar 2024, and overwhelming majority of its 2025 supply has already been allocated” as highlighted by CEO Sanjay Mehrotra during its recent earnings conference call.
Incidentally, Nvidia’s premium Blackwell chip architecture products during its GTC developers’ conference make use of Micron’s HBM.
(2) Analysts optimisms.
Citibank analyst, Christopher Danely expected Micron’s valuation multiple to expand as a result of its AI exposure, adding that its peers were also set for multiple expansion. Citi reiterated their $150 price target on Micron shares and maintained a Buy rating.
Piper Sandler analyst Harsh Kumar expected the tailwinds behind Micron’s stellar earnings & guidance to last through the remainder of 2024 and into 2025. Micron will benefit from a pricing strength in it’s traditional memory and HBM. He has an “Overweight” rating on the stock and increased his price target to $130 from $95.
(3) Industry recovery.
Industry recovery: The memory chip industry, which Micron is a major player in, is expected to recover from a recent downturn.
(4) Others.
Market volatility: AI advance is driving everything remotely AI-related to overdrive. The US 3 Composite Indexes are a good example as they are literally tearing up their respective chart almost daily. (see above).
Convinced yet that Micron Technology is the next Semiconductor to shine?
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Do you think Micron will hit the $130 price target forecasted by Piper Sandler’s analyst?
Do you think Micron will be able to catch up its peers in 2024?
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Good read. thanks for the article
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