Micron: Ride the Semiconductor wave Now !
Looking Back.
On 12 Apr 2024, I have shared a post titled “Time to get On / Off - Micron Express Train ? (click to read it)
Back in April 2024, Micron stock price was $122.52 per share. Fast forward to Mon, 24 Jun end of day, MU was at $140 per share. (see below)
MU share price - 01 Apr to 24 Jun 2024
In a short span of 2 months (and a few more day), MU has gained a healthy +10.24%. returns, if you asked me.
YTD, $Micron Technology(MU)$ has added around $60 billion in market value.
On the eve of its quarterly earnings results, below are Wall Street analysts’ expectations:
Analysts remain “optimistic” about this cyclical stock owing to the fact that all things Artificial Intelligence (AI) related is still red-hot.
Secondly, AI systems need huge amounts of memory, and Micron Technology is one of the world's biggest suppliers.
As investors see the group's high-bandwidth-memory (HBM) chips playing a key role in the AI-investment surge.
HBM chips are designed to be embedded in larger artificial-intelligence semiconductors, including those made by $NVIDIA Corp(NVDA)$ , to help boost system performance and reduce power consumption.
Micron has also said that growing demand for its legacy DRAM memory products is likely to continue over the next two years.
Analysts’ Price Targets.
(1) $Citigroup(C)$ analyst Christopher Danely, lifted price target to $175 from $150, with a “Buy” rating. He sees strong sales and improving profit margins driving better-than-expected profits. It should continue to trade at a premium to its historical range given AI exposure.
(2) Baird analyst Tristan Gerra. Bullish about the stock too. He has lifted price target to $172 from $150. He sees meaningful upside opportunities for Micron as DRAM pricing remains strong,
Q3 2024 Earnings Forecast.
The semiconductor company will report earnings for the fiscal quarter ending May 2024 on Wed, 26 Jun 2024 — after the closing bell.
Forecast earnings.
Revenue: $6.7 billion vs $3.75 billion (Q3 2023).
Earnings per share (diluted): $0.30 vs -$1.75 (Q3 2023).
Net income: $399.39 million vs -$1.9 billion (Q3 2023).
Outlook for Q4 2024.
Analysts from $JPMorgan Chase(JPM)$ and Citibank expect Micron to announce stronger-than-expected guidance for Q4, that could wow investors and drive the stock higher.
J.P. Morgan analysis.
Expect "Aug-Qtr EPS will be guided higher versus consensus expectations.
Anticipate Micron will reaffirm its view that DRAM (Dynamic Random-Access Memory) and NAND storage technology pricing will increase through 2024 into 2025 as strong high-bandwidth memory (HBM) bit shipment and pricing visibility start to extend into 2026.
Citi analysis:
Expect Micron to post results and guidance above consensus given the DRAM upturn and Micron’s increasing AI memory exposure.
Projecting Q4 revenue guidance to be $8 billion.
Last Words.
Micron has been touted as one of the “three horsemen of AI,” along with Nvidia and $Broadcom(AVGO)$.
The chipmaker is projected to report a +76% increase in earnings compared to this time last year.
Possible Risk - China export restrictions.
As with any businesses, there are potential risks for Micron Technology too.
One factor that will also prove key for Micron earnings over the coming months will be whether and how the Biden administration advances export restrictions on key AI technologies to China.
Bloomberg reported earlier this month that officials were looking to tighten rules on the sale of gate all-around, or GAA, architecture, to China-based customers, with early-stage talks on limiting HBM sales.
For now, I think the potentials (so many) outweigh the risk. Remember to make hay while the sun shines right !
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Do you think Micron will spike upon earnings release, given that Nvidia has been falling ?
Do you think you US will further restrict China’s access to AI-components required in the race for AI supremacy?
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